Michael Adler, a spokesman for Moody’s in New York, declined to comment.
Fitch Ratings said Feb. 5 it has “no reason to believe” it faces a lawsuit from the U.S. Dan Noonan, a spokesman in New York for Fitch, said the company stands by that statement.
U.S. success in the lawsuit in federal court in Los Angeles is “far from clear,” said Jeffrey Manns, an associate professor at George Washington University Law School. S&P’s defense may include evidence that the agency believed in its ratings and proof that U.S. fraud allegations are unfounded. Company lawyers are also weighing whether to argue that the 1989 statute underpinning the case doesn’t apply to S&P.
“We start with proposition that we deny there was any fraud,” Abrams said yesterday in telephone interview. Fraud claims have “a high burden of proof.”
Moody’s, S&P and Fitch are being investigated by the New York Attorney General over whether the companies breached a 2008 settlement with the state, a person familiar with the matter said yesterday.
Cuomo Deal
The companies reached an agreement with then-Attorney General Andrew Cuomo that required them to adopt changes to their operations. Eric Schneiderman, the current attorney general, is probing whether they complied with the agreement, said the person, who wasn’t authorized to speak publicly about the probe and asked not to be identified.
Moody’s Adler and Fitch’s Noonan didn’t immediately respond to e-mails yesterday after regular business hours seeking comment about the New York probe.
Catherine Mathis, an S&P spokeswoman, declined to comment on the probe.
The Justice Department’s investigation started long before the downgrade, said Janet Tavakoli, founder of Chicago-based consulting firm Tavakoli Structured Finance Inc.