"Rating Agencies Win Dismissal of Lawsuits"

Reuters:

Wednesday's ruling by the 2nd U.S. Circuit Court of Appeals in New York was a victory for McGraw-Hill Co's (MHP.N) Standard & Poor's, Moody's Corp's (MCO.N) Moody's Investors Service and Fimalac SA's (LBCP.PA) Fitch Ratings, and upheld three lower-court decisions.

Rating agencies have been widely faulted, including by Congress, for contributing to the global credit and financial crises that began in 2007 by issuing high ratings on debt that proved risky. The agencies have in other litigation argued their ratings were opinion protected by the First Amendment.

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The plaintiffs alleged that the rating agencies failed to act as dispassionate evaluators of credit risk, and instead actively aided in the securitization process, working closely with banks until the desired high ratings were achieved.

But the 2nd Circuit said the agencies were not liable under federal securities law as "underwriters," because they did not directly help distribute the securities, and rather simply enabled others to do so through their ratings.



http://www.reuters.com/article/2011/05/11/us-ratingagencies-ruling-idUSTRE74A4OK20110511