S&P, Moody’s Win Dismissal of Claims in Mortgage Suit

Discussion in 'Wall St. News' started by ASusilovic, Jan 26, 2010.

  1. Jan. 26 (Bloomberg) -- Standard & Poor’s and Moody’s Corp. won dismissal of a lawsuit seeking to hold them responsible for defrauding investors who bought about $100 billion of mortgage- backed securities.

    At a hearing today, U.S. District Judge Lewis Kaplan in New York said he would dismiss claims against the rating companies, according to a clerk for the judge. Lehman Brothers Holdings Inc., which was alleged to have once owned the bonds that were sold, is bankrupt and not a defendant in the case.

    “We are pleased the judge granted our motion,” Chris Atkins, a spokesman for S&P, a unit of McGraw-Hill Cos., said in an interview. Michael Adler, a spokesman for New York-based Moody’s, didn’t immediately return a call.

    Investors in the mortgage-backed securities claimed in their lawsuit that S&P and Moody’s misled them by disregarding ratings guidelines, serving conflicting roles in evaluating and structuring the bonds, and sacrificing their independence.

    The ruling in the mortgage case came after defense lawyers in other lawsuits related to Lehman Brothers sought dismissals. Those cases involve fraud claims against the underwriters of Lehman’s debt and stock and against former directors and officers, including ex-Chief Executive Officer Richard Fuld.

    Kaplan didn’t rule in those lawsuits, which focus on hundreds of public offerings generating total proceeds of more than $47 billion. Kaplan said that he would issue a written opinion explaining his decision in the mortgage case and rendering an opinion in the other cases.

    Max Berger, a lawyer for investors, didn’t immediately return a call.

    The cases are In Re Lehman Brothers Securities and ERISA Litigation, 09-md-2017, U.S. District Court, Southern District of New York (Manhattan),


    Nobody was misleading anybody and everybody is happy to have lost billions of USD.:eek:
  2. MattF


    I think the phrase "due diligence" comes to mind...
  3. Sure DD, agree. Along with that comes responsibility to be objective if you are providing judgments that others will use to base decisions off of. I hope both go bankrupt. They are almost as bad as Madoff.

    America is nothing more than a country run by corporations.
  4. Complete bullshit! Those two rating agencies should be held and treated in the same standard as Arthur Andersen in the aftermath of the Enron scandal.

    However, this shouldn't be the end. Just as Arthur Andersen was one of the five "Big F" accounting firms that went down, I'm sure one of the three "big F" rating firms will go down in history as the scapegoat of the housing bubble, and rightly so might I add.
  5. From now on, instead of providing ratings, they'll provide "public relations" advice. :cool: