Moody's Corp. and its lawyers at Sullivan & Cromwell have knocked out a six-year-old investor lawsuit accusing the ratings agency of making false statements about the independence and objectivity of its "issuer-pays" business model where Moody's is paid by the same companies for whom it rates securities. Southern District Judge George Daniels granted summary judgment to Moody's on Friday.
The lawsuit dates back to the summer of 2007 when the subprime mortgage crisis was picking up steam and Moody's and its competitors began downgrading residential mortgage-backed securities. Plaintiffs filed a putative class action in July 2007 in the Northern District of Illinois that was later consolidated with a separate suit filed in New York. Teamsters Local 282 Pension Trust Fund, and individual investors Charles McCurley Jr. and Lewis Wetstein, were named as lead plaintiffs. They were represented by co-lead counsel at Glancy Binkow & Goldberg; Kessler Topaz Meltzer & Check; and Kirby McInerney.
