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Standard & Poor’s and Moody’s Dodge Another Lawsuit

In another win for ""Standard & Poor's"":http://www.standardandpoors.com/home/en/us (S&P) and ""Moody's Corp."":http://www.moodys.com/cust/default.asp, a New York federal judge dismissed a lawsuit[IMAGE]

claiming the companies defrauded investors who relied on their ratings before buying $63 billion of investment-grade mortgage-backed securities, ""Bloomberg recently reported."":http://www.bloomberg.com/apps/news?pid=20601208&sid=ayntAn0fdd2Q

According to Bloomberg, the claims against S&P and Moody's were part of a lawsuit filed by institutional investors against various banks and rating companies accused of making untrue statements and omissions in registrations statements and prospectuses for 84 offerings sold as safe.

S&P and Moody's weren't the only companies to dodge the bullet. Complaints against Credit-Based Asset Servicing &


Securitization LLC (C-Bass), First Franklin Financial Corp., and Merrill Lynch Mortgage Lending Inc. were also thrown out in a two-page order by U.S. District Judge Jed Rakoff.

The basis for the dismissals was not immediately made clear, but an explanation of the reasoning is expected in a written opinion by the judge.

C-Bass attorney Jamie Wareham of Paul Hastings Janofsky & Walker LLP told Bloomberg, ""The likely reason to come from Judge Rakoff's opinion will be important to many defendants in financial crisis litigation. The disclosures were adequate, and the market knew of the risks associated with subprime products.""

This isn't the first lawsuit investors have filed against S&P and Moody's. And it isn't the first one to be dismissed either.

""As DSNews.com reported"":http://dsnews.comarticles/preview/a203bb51157e033cadd743db21ed6618, in January, a judge dismissed a lawsuit against S&P and Moody's brought by investors who claimed the two ratings agencies defrauded them on nearly $100 billion in mortgage-backed securities (MBS) issued back in 2007 by the now-defunct Lehman Brothers Holdings, Inc.

In addition, on March 29, the two companies, along with Fitch Ratings, won dismissal of a negligence and fraud lawsuit by two California investors who lost money on highly-rated bonds, Bloomberg said.

About Author: Brittany Dunn


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