US District Judge George B, Daniels had dismissed the suit filed by the Teamsters Local 282 Pension Trust Fund against the Moody's Corp. The Teamsters Fund claimed that the credit ratings firm had issued false statements regarding its independence and objectivity.
The Manhattan district court judge said that it failed to establish the fact that the ratings agency had violated existing securities laws. The pension fund is an investor in Moody's and it had argued the company was drawn into conflicts of interest when it made false ratings to structured securities products just before the 2008 market crash.
In the case, the pension fund alleged that the ratings agency's share values declined after issues were raised about Moody's high ratings for mortgage backed securities and other products. It was only in 2007 did Moody's and other agencies downgraded the valuations for these risky securities.
According to Judge Daniels, "Plaintiffs must proffer some evidence demonstrating that Moody's specific alleged misrepresentations caused the materialization of the risk that Moody' rating practices were unsustainable. They fail to do so."
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