S&P pushes to move state cases to U.S. federal court
NEW YORK, April 2
NEW YORK, April 2 (Reuters) - Standard & Poor's redoubled efforts on Tuesday to move more than a dozen lawsuits charging the ratings agency with fraud to federal from state courts, arguing that the various state cases involve federal regulations.
Connecticut Attorney General George Jepsen is leading a coalition of attorneys general that brought state cases against the McGraw Hill Cos Inc unit in February.
Those cases were announced the same day that the Justice Department said it was seeking $5 billion in its own civil lawsuit against S&P.
The rating agency wants to move the lawsuits by 16 U.S. states and Washington, D.C., to the federal level, hoping to limit liabilities as it defends itself against accusations of inflating credit ratings to try to win fees from clients.
The government argued last week against moving the cases.
However, S&P parent McGraw-Hill said on Tuesday that the government not only failed to disclose its own interest in the state cases last week, but that the various state cases turn on federal rules and regulations, including Securities and Exchange Commission rules.
The company also argued that moving the cases to one court would help avoid a "patchwork of potentially overlapping and inconsistent injunctions."
Legal experts said earlier that S&P might struggle to move the state cases, given recent similar cases.
The lawsuits allege that S&P misled investors into believing its ratings were objective and not tainted by conflicts of interest. The ratings were mainly for complex fixed income products that imploded in the financial crisis.
Moody's Corp unit Moody's Investors Service and Fimalac SA's Fitch Ratings - S&P's main rivals - were not hit with similar federal lawsuits.
McGraw-Hill shares lost more than a quarter of their value during the week the suits were announced. They closed on Monday at $51.55 a share and were at $51.85 in midday trading.