In 2009, then-Ohio Attorney General Richard Cordray sued S&P, Moody’s and Fitch at the U.S. court in Columbus, accusing the firms of issuing faulty ratings that caused five public employee pension funds, on whose behalf he sued, to buy money- losing investments.
U.S. District Judge James L. Graham threw out the case in September 2011, ruling the ratings were “predictive opinions,” and that absent specific allegations of intent to defraud, the firms could not be held liable.
A Cincinnati-based federal appeals court unanimously upheld that decision in December.
Cordray was appointed by President Barack Obama in January 2012 as director of the federal Consumer Financial Protection Bureau in Washington.
In November, an Australian judge ruled S&P misled investors by giving its highest credit grade to securities whose value plunged during the global financial crisis.
The companies also face European Union curbs on how they update markets about the quality of government debt under plans approved by the bloc’s lawmakers last month. Some governments in the EU, including France and Germany, have called for tougher rules on ratings companies, saying their decisions risk harming the bloc’s fight against its fiscal crisis.
The case is U.S. v. McGraw-Hill, 13-00779, U.S. District Court, Central District of California (Los Angeles).
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.