Moody’s Corp. and Standard & Poor’s are not liable for nearly $100 billion in losses allegedly incurred by a group of investors in mortgage-backed securities issued by Lehman Brothers, a federal judge has ruled. On Tuesday, Southern District of New York Judge Lewis Kaplan granted the rating agencies’ motion to dismiss the investors’ suit.
The action was initially brought in state court against Lehman and several Lehman executives, including former chief executive officer Richard S. Fuld Jr. After Lehman went bust in mid-September 2008, the plaintiffs amended their suit, which had been removed to federal court, to try to hold the rating agencies liable. The plaintiffs cited the Securities Act of 1933 (pdf), which imposes strict liability for making false or misleading statements in securities offerings. But Moody’s and S&P countered that they were not liable under the act as either underwriters or sellers. Kaplan sided with the ratings agencies in a ruling from the bench.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]