In the wake of the announcement this week that the U.S. Department of Justice was bringing forth a $5 billion lawsuit, alleging that Standard and Poor's defrauded investors during the financial crisis, some industry insiders say that this behavior at the "Big 3" agencies is still ongoing.
"Many of the practices you're seeing in [the DOJ's lawsuit with S&P] are still going on, shaping things in order to get more business. [The major ratings agencies] are still selling out," said Jules Kroll, CEO of Kroll Bond Ratings, a New York-based ratings agency. S&P "needs a great lawyer. The game is not over for Moody's and Fitch, either."
"Investors have been looking for better quality and legitimate research" in credit ratings, he said on CNBC's "Squawk on the Street." "It is not just about getting more business, it's about putting the investors first. That is still lacking in this industry."
"It's very clear from this lawsuit that [S&P] will have years of difficulty defending what is really unconscionable behavior. Those of us in the field understand that this has been taking place for a long time," he said. "This industry was out of control and this lawsuit calls them into question in a serious way."
"This investigation was going on for 18 months [before the credit downgrade], how dare S&P suggest that they were singled out because they gave a downgrade of the U.S. credit rating."
"I'd like to hear from Terry McGraw," said Kroll, "He knew what was going on. The emails show it, the documents show it, the former employees show it." Terry McGraw is the current chief executive and president of McGraw Hill Cos., which is the parent company of S&P.
The U.S. government sued Standard & Poor's in federal court in Los Angeles on Monday, accusing the McGraw Hill Cos. unit of a scheme to defraud investors in mortgage-related securities that collapsed in the financial crisis.
Standard & Poor's has said the lawsuit is "without legal merit and unjustified" and that it will "vigorously defend" itself against the erroneous claims.
Earlier this week, Floyd Abrams, the lead attorney for Standard & Poor's, told CNBC: "There was no fraud. The ratings that were issued were believed by the people that issued them."
He said that "the intensity of the investigation" into the agency's bond ratings "significantly increased" after S&P downgraded the U.S. government's credit rating in 2011.
In the interview, Abrams added that he "doesn't think anyone knows" for certain whether the lawsuit was in retaliation for S&P's downgrade of the U.S. credit rating, which followed the impasse in Washington during the summer of 2011 over the debt ceiling.
— Reuters contributed to this report.
— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from Squawk on the Street @ToscanoPaul