Tag Archives: rating agencies

A Closer Look at the DoJ’s Complaint against McGraw-Hill and S&P

By now you will have heard that the U.S. Department of Justice has filed a securities class action lawsuit against S&P and its corporate parent, McGraw-Hill, about the rating agency’s  ratings of collateralized debt obligations as the subprime meltdown unfolded. A copy of the DoJ’s complaint, filed on February 4, 2013 in the Central District of … Continue Reading

Australian Court: S&P Liable for Negligent Misrepresentations in Complex Financial Instrument Triple-A Rating

Though many include the rating agencies among the list of culprits that contributed to the global financial crisis, the rating agencies have up until now largely dodged attempts to hold them liable. While there have been a small number of cases (refer for example here) where courts have denied the motions of rating agencies to dismiss … Continue Reading

Rating Agencies Must Face Fraud Claims for Toxic SIV Ratings

In the latest development in the long-running  investor lawsuit  involving the collapsed Cheyne Financial structured investment vehicle, Southern District of New York Judge Shira Scheindlin has held that the rating agency defendants in the case must face the investors’ claims for common law fraud under New York law. A copy of Judge Scheindlin’s August 17, … Continue Reading

Rating Agencies Must Defend Negligent Misrepresentation Claims for Toxic SIV Ratings

The rating agencies must defend against  claims for negligent misrepresentation in connection with the ratings the firms assigned to a pair of structured investments vehicles, Southern District of New York Judge Shira Scheindlin has ruled in a pair of May 4, 2012 decisions. Judge Scheindlin did grant the defendants’ motions to dismiss claims for negligence, breach … Continue Reading

Second Circuit Holds Rating Agencies Cannot Be Held Liable as ’33 Act Underwriters

In a May 11, 2011 opinion (here), a three-judge panel of the Second Circuit affirmed the dismissal of rating agency defendants in litigation filed under the Securities Act of 1933 and involving mortgage-related securities issues by Lehman Brothers and IndyMac and the Residential Asset Securitization Trust (RUST). The Second Circuit affirmed the District Court’s rulings that … Continue Reading

Court Rejects Rating Agencies’ Argument that Credit Crisis Alone Caused Investor Losses

In a April 26, 2010 opinion (here) that could have significant implications for motions to dismiss in the many subprime-related securities actions pending against the rating agencies, Southern District of New York Judge Schira Scheindlin rejected the arguments of Moody’s and S&P that the action investors in the Rhinebridge structured investment vehicle (SIV) should be … Continue Reading

Rating Agencies Are Not ’33 Act “Underwriters”

Rating agencies are not susceptible to ’33 Act liability as "underwriters," even if they helped structure the mortgage backed securities at issue, according to February 1, 2010 ruling (here) by Southern District of New York Judge Lewis Kaplan in which he dismissed Moody’s and McGraw-Hill (S&P’s parent) from the Lehman Brothers Mortgage-Backed Securities Litigation.   … Continue Reading

So What About the Ohio AG’s Lawsuit Against the Rating Agencies?

On November 20, 2009, Ohio Attorney General Richard Cordray announced (here) the filing of a lawsuit in the Southern District of Ohio on behalf of five Ohio pension funds against Standard & Poor’s, Moody’s and Fitch. According to his press release, the complaint, which can be found here, charges the rating agencies with "wreaking havoc … Continue Reading

Rating Agencies’ First Amendment Defense Rejected in Subprime Suit

Among the causes many cite for the subprime meltdown is the willingness of the rating agencies to assign investment grade rating to securities backed by subprime mortgages. For that reason, in many of the lawsuits filed as part of the subprime litigation wave, plaintiffs have named rating agencies as defendants, seeking to hold them responsible … Continue Reading

Forum Selection and ’33 Act Subprime Lawsuits

As I have previously noted (here), one of the significant procedural developments in the subprime securities litigation wave has been the plaintiffs’ apparent interest in pursuing ’33 Act subprime-related lawsuits in state court. Section 22(a) of the ’33 Act expressly provides that the federal court’s jurisdiction for ’33 Act lawsuits is "concurrent with State and … Continue Reading