My Special Situations portfolio had a nice run with McGraw-Hill (SPGI 0.01%), which recently sold off its education segment. My original purchase was predicated on a spin-off or sale of that division, leaving a highly cash generative business behind. We saw that come to fruition, and a sale of the shares just a few days ago would have seen the position up nearly 20% in about nine months.

But what a difference a day makes!

Since then, the U.S. Department of Justice has announced that it is filing a civil suit against the company's Standard & Poor's unit. As The Wall Street Journal explained: "The Justice Department alleges that S&P knew the housing market was collapsing but was intentionally slow to downgrade hundreds of securities because of concerns that such a move would cut off the pipeline of deals and anger issuer clients." The government has said that it could seek more than $5 billion as part of the suit. For reference, McGraw's market cap is about $14 billion.

It surprises no one that the stock plummeted on the news. And it won't be surprising if further negative details emerge as the government bangs the drum. That presents a lot of headline risk for the company, something I had suspected was largely past, given the five years since the housing market exploded with not much in the way of penalties against the ratings agencies. Investors in Moody's (MCO -0.25%) have also seen shares tank, for similar reasons, expecting that agency to be next in the firing line.

Of course, the ratings agencies aren't the only players responsible for deep-sixing the global economy, but the big banks are too politically well-connected to receive the scrutiny and action that they deserve, and S&P's fatuous downgrade of U.S. debt in 2011 did it no favors.

So I'm selling my McGraw-Hill shares with a modest loss (as of this writing). I bought at $48.77, and with the stock now around $45, my Special Situations portfolio will notch a loss of about 8% if we could sell today. Tomorrow, I'll liquidate the position and return to looking for other special situations.