The major credit rating agencies have been under fire for years with institutional investors blaming the ratings giants for giving solid scores to mortgage-bond investments that later caused deep losses.
But the ratings giants secured a major victory in court this week, according to Reuters news.
Investors led by the Ohio Police & Fire Pension Fund sued in court claiming they lost $457 million in residential mortgage-backed securities investments. The firms sued the key ratings agencies for issuing high ratings on what the plaintiffs consider toxic RMBS transactions. The essence of the case is that the ratings giants made the mortgage bonds appear more attractive to investors, which eventually led to deep pension fund losses.
However, Reuters says the credit rating agencies won in court this week, with the 6th U.S. Circuit Court of Appeals in Cincinnati upholding a lower court's dismissal of the investors' lawsuit against Moody's Investors Service, Standard & Poor's, and Fitch Ratings.
Click here to read Reuters full report on the case.