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The Southern District Opens the Door for Fraud Claims against Rating Agencies by Sally G. Blinken
Venable LLP - New York Office
William H. Devaney
Venable LLP - New York Office
Edmund M. O'Toole
Venable LLP - New York Office
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October 26, 2009
Previously published on October 21, 2009
Institutional investors who lost millions in failed special investment vehicles (SIVs) -- consisting of asset backed securities, residential mortgage backed securities, and collateral debt obligations -- received a much needed boost last month with the recent Southern District decision in Abu Dhabi Commercial Bank v. Morgan Stanley,08-Civ.-7508. Southern District Judge Scheindlin ruled that Credit Rating Agencies accused of misrepresenting the risk of notes pitched to a selective group of investors cannot claim First Amendment protection against lawsuits. This ruling will be of great assistance to plaintiffs who are suing to recoup millions in losses from investments in these failed SIVs.
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