The charges would mark the first enforcement action the government has taken against a major rating agency involving the financial crisis.
S&P said Monday that the Justice Department had informed it that it intends to file a civil lawsuit focusing on S&P's ratings of mortgage debt in 2007. The action does not involve any criminal allegations.
S&P denies any wrongdoing and says any lawsuit would be without merit.
A lawsuit would "disregard" the fact that S&P reviewed the same data on risky mortgages as the rest of the market and U.S. government officials, who publicly said in 2007 that the problems in the subprime mortgage market appeared to be limited, the company said in a statement.
In the statement, S&P said it "deeply regrets" that its ratings on some securities "failed to fully anticipate the rapidly deteriorating conditions in the U.S. mortgage market during that tumultuous time."
Justice Department spokeswoman Nanda Chitre declined to comment on the matter.
S&P is a unit of New York-based McGraw-Hill Cos. McGraw-Hill's stock plunged nearly 14 percent Monday after reports surfaced about the government's expected lawsuit.
Moody's Corp., the parent of Moody's Investors Service, another rating agency, closed down nearly 11 percent. The two rating companies' stocks suffered the biggest percentage drops in the S&P 500 index, which closed down slightly more than 1 percent.
S&P, Moody's, and Fitch Ratings, the third major rating agency, have been blamed for helping fuel the crisis by assigning AAA ratings to trillions of dollars in risky securities backed by subprime mortgages. The securities later collapsed in value once the housing market bubble burst and home-loan delinquencies soared. Major U.S. banks absorbed tens of billions of dollars in losses.
The rating agencies are crucial arbiters of the creditworthiness of securities traded around the world. The grades they assign can affect a company's ability to raise or borrow money and how much investors will pay for securities it issues.
The securities in the anticipated federal lawsuit are collateralized debt offerings. CDOs are investment vehicles that contain many underlying mortgage loans.
A CDO generally gains in value if borrowers repay. But a wave of defaults can cause them to tumble in value. Soured CDOs contributed to, and intensified, the financial crisis.
Critics have long argued that rating agencies have an inherent conflict of interest: They're paid by the same companies whose products and credit they rate. The agencies have been accused of issuing unduly high ratings before the crisis because of pressure from banks they desired as clients.