Ken Scott, a professor at Stanford Law School, said the government may have a hard time prevailing on its claim that S&P’s practice of making issuers pay for securities ratings contributed to a fraud.

“The allegation in the complaint that S&P concealed this conflict and therefore presumably buyers were unaware of it, that’s total nonsense,” Scott said.

‘Subterranean Influence’

The government will have to present proof not that the conflict of interest had “almost a subterranean influence but that there was actual intent to defraud,” Scott said. The burden of proof, while not as high as in a criminal case, is significant, Scott said, and “whether they can meet that or not will be what the trial is all about.”

Beginning in the fall of 2006 and continuing to about the spring of 2007, one S&P executive regularly expressed frustration to colleagues that she was prevented by other executives from downgrading ratings of subprime mortgage securities because of concern that the company’s business would be affected, the government said.

“This market is a wildly spinning top which is going to end badly,” said another executive in 2006, according to the complaint.

In March 2007, an analyst set wrote lyrics to the tune of “Burning Down the House” by the rock group Talking Heads.

According to the complaint, it began:

“Watch out / Housing market went softer / Cooling down / Strong market is now much weaker / Subprime is boi-ling o-ver / Bringing down the house.”

The government said the analyst later sent a video of himself singing and dancing the first verse “before an audience of laughing S&P co-workers.”