On February 5, the Attorney General of California, Kamala D. Harris, filed suit in Superior Court in California against Standard & Poor’s and its parent company, the McGraw Hill Company. The Complaint alleges violations of California’s False Claims Act, Unfair Competition Law, and False Advertising Law, and alleges that S&P made knowingly false representations in connection with credit ratings for RMBS and CDOs between 2004 and 2007. The complaint further alleges that California’s public pension funds lost hundreds of millions of dollars in connection with their purchase of RMBS rated by S&P. The state seeks treble damages, civil penalties and a permanent injunction. Complaint.
On February 5, two Standard & Poor’s entities filed a declaratory judgment action in the Southern District of South Carolina seeking to bar the South Carolina Attorney General from suing S&P under South Carolina’s Unfair Trade Practices Act in connection with S&P’s ratings of RMBS and CDOs. S&P filed the action in response to a December 20, 2012 letter from the Attorney General that threatened litigation. S&P alleges that its credit ratings are predictive and subjective opinions that constitute protected speech under the First Amendment. It seeks a declaration that South Carolina’s Unfair Trade Practices Act may not constitutionally be applied to S&P’s credit rating activities and an injunction prohibiting the Attorney General from pursuing any lawsuit that is inconsistent with S&P’s First Amendment rights. Complaint.
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