A nearly $1.4 billion nationwide settlement with Standard & Poor's Financial Services over allegations of misleading investors leading up to the U.S. financial collapse seven years ago will put $36 million into Connecticut's general fund, Attorney General George Jepsen announced Tuesday.

In 2010, Connecticut became the first state in the nation to sue S&P, and thus received a larger share of the settlement than other states.

"Today's settlement is the product of years of hard-fought litigation," Jepsen said in a statement. "I am especially proud that it was the Connecticut Office of the Attorney General that developed the unique legal theory that has been foundational to the lawsuits."

In all, more than 15 states and the U.S. Department of Justice will receive payments from S&P. The other states are Arizona, Arkansas, California, Colorado, Delaware, Idaho, Illinois, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee and Washington, plus the District of Columbia.

While pension and hedge funds had unsuccessfully sued S&P because of its overly optimistic ratings of mortgage-backed securities, Connecticut based its suit on a new legal premise: that the financial-services firm had engaged in unfair trade practices by promising to deliver independent, objective analyses when it was fudging ratings to boost its profits.

"In effect, S&P considered its own business interests, contrary to its public statements that its ratings were objective," Jepsen said. "These actions had a very direct and serious impact on our national economy that is still being felt in communities and households in Connecticut and across our country."

According to the lawsuit, S&P's misconduct began as early as 2001, but became acute between 2004 and 2007, just before the nation's financial collapse. Among the allegations was that S&P assigned inflated credit ratings to assets it knew to be toxic and then packaged the securities for sale to Wall Street banks.

"In August 2014, the United States Securities and Exchange Commission adopted new requirements for credit rating agencies that address conflicts of interest and procedures to protect the integrity and transparency of rating methodologies and that provide for certifications to accompany credit ratings attesting that the ratings were not influenced by other business activities," according to a press release.

Jepsen said in a conference call that a similar case Connecticut filed against the Moody's ratings service will use the same legal theory and should begin moving forward again in the next few weeks. So far, only Mississippi had joined Connecticut in the Moody's case.

Unlike with other lawsuits filed by the state against Apple and mortgage lenders, Jepsen said there is no way to provide consumers direct relief for the actions of S&P - and most of the losses were suffered by sophisticated investors who have not been successful at seeking restitution through the courts. Instead, all residents will share in tax savings based on $36 million being returned to the general fund, he said.

Jepsen pointed out the settlement is $6 million more than it costs annually to run his agency.

l.howard@theday.com

Twitter: @KingstonLeeHow