Investors Fail to Revive Lawsuit Against S&P
Like its fellow ratings agencies, Standard & Poor's once seemed virtually immune from liability for doling out AAA ratings to doomed-to-fail securities in the run-up to the subprime meltdown. A proposed class action brought by investors in S&P parent McGraw Hill Companies Inc. was a case in point: A federal judge tossed the case back in March 2012, and the U.S. Court of Appeals for the Second Circuit briskly affirmed the dismissal last August.
Nevertheless, plaintiffs lawyers at Robbins Geller Rudman & Dowd, citing a claim filed earlier this year against S&P by the U.S. Justice Department and other new evidence, attempted a last-ditch bid to revive their failed shareholder suit. But Southern District Judge Sidney Stein (See Profile) rejected the effort in a ruling issued on Tuesday, concluding it was too little too late.
Stein originally dismissed the suit last March, ruling that some of the S&P statements at issue were "mere commercial puffery" and that the plaintiffs failed to adequately allege an intent to deceive investors.
But Robbins Geller petitioned Stein for another shot at S&P after the Justice Department filed its 119-page complaint against the company in February. The plaintiffs pointed to detailed allegations in the DOJ's complaint related to S&P's ratings of residential mortgage-backed securities and collateralized debt obligations.
Stein was unmoved, refusing to take the "extraordinary" step of resuscitating a twice-dismissed case.
"Plaintiffs' purported new evidence would not have changed the outcome of the original decision because those allegations do not correct the pleading defects for which the Court dismissed its previous complaint," Stein wrote.
The case is Reese v. The McGraw-Hill Companies, 08 Civ. 7202. Cahill Gordon & Reindel represented McGraw Hill.