U.S. District Judge David Carter in Santa Ana, Calif., announced he would tentatively deny S&P’s motion to dismiss after hearing arguments on Monday. In his order, he said that S&P’s statements were not mere “puffery” but material to investors.
“The issue of reliance also weighs heavily in favor of Plaintiff’s arguments,” Carter wrote. “The government’s complaint goes to great lengths to plead that S&P made specific representations knowing that they were material to and would be relied on by the investors who used their credit ratings to gauge the creditworthiness of potential investments.”
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