Overview
In an opinion dated Friday, Judge Scheindlin denied in part a motion to dismiss claims against Moody’s and Standard & Poor’s based on their ratings of a structured investment vehicle. The Court refused to dismiss negligent misrepresentation claims against the agencies because the plaintiffs sufficiently alleged that they had a “special relationship” with the agencies:
[T]he Rating Agencies (1) intended that their ratings would be used to evaluate the SIV; (2) intended that the plaintiffs – members of a select group of qualified investors – would rely on their ratings to evaluate the SIV; and (3) prepared their ratings with the end and aim of inducing investors such as the plaintiffs to invest in the SIV. Because there was a privity-like ‘special relationship’ between the plaintiffs and the Rating Agencies, the Rating Agencies’ motion to dismiss the negligent misrepresentation claims is denied.The Court found that the “special relationship” did not rise to the level of a fiduciary one and dismissed claims for breach of fiduciary duty.