negligent misrepresentation

Goldman Sachs and Prudential Settle RMBS Action

On January 6, Judge Susan D. Wigenton of the United States District Court for the District of New Jersey “so ordered” the parties’ stipulation of voluntary dismissal with prejudice of Prudential’s claims against Goldman Sachs after the parties reached an undisclosed settlement.  Prudential and its affiliates had sued Goldman Sachs and its affiliates for alleged material misrepresentations and omissions in the offering materials for more than $375 million in RMBS.  Prudential asserted claims for common law fraud and fraudulent inducement, negligent misrepresentation, equitable fraud and New Jersey civil RICO violations.  Order.

Southern District of Ohio Dismisses Suit Against Ratings Agencies

On September 26, 2011, Judge James L. Graham of the United States District Court for the Southern District of Ohio dismissed a lawsuit brought by five Ohio state pension funds against Standard & Poor’s Financial Services, LLC, Moody’s Investors Service, Inc., and Fitch, Inc., alleging violations of the Ohio Securities Act and negligent misrepresentation. The Ohio pension funds alleged that the credit ratings assigned to certain residential and commercial mortgage-backed securities were false, negligently assigned, based on flawed methodologies, and caused $457 million of losses. The Court, applying both Ohio and New York law to the negligent misrepresentation claim, dismissed all claims. The Court found that Defendants’ ratings were non-actionable opinions and, absent specific allegations of fraudulent intent or a duty to the Ohio pension funds, Defendants could not be held liable for alleged negligence in their ratings methodologies. Decision.