The McGraw-Hill Companies, Inc. (NYSE:MHP), the parent company of Standard and Poor's is in hot water after the United States filed a lawsuit over the ratings on mortgage backed securities prior to and during the financial crisis. The amount of damages being sought in the lawsuit are said to be near $5 billion. The hype on Wall Street is saying, should MHP lose, they could be crippled as a company.
There is no way in hell McGraw-Hill will ever go under based on this. First, settlements are always reached. The amount is usually somewhere in the middle, let's say $2.5 billion. In addition, the government would never cause a company that employs close to 25,000 people to go out of business. The PR disaster alone would be enough to let them have a payment plan over a decade.
The stock has been crushed, falling from 52 week highs of $58.62 to its current level of $43.83. There is panic dumping here and somewhat justified as there will be a monetary penalty. However, with major support looming at $42.00, it is likely the drop will stall in the near term and maybe even see a great bounce.