(Corrects stock symbol for IKB Deutsche Industriebank in
paragraph 8 to IKBG.F)
* Rating agencies, Morgan Stanley reach settlements
* Investors said to lose money on structured investments
By Nate Raymond and Jonathan Stempel
NEW YORK, April 26 Settlements have been reached
in two long-running lawsuits seeking to hold Moody's Investors
Service and Standard & Poor's responsible for misleading
investors about the safety of risky debt vehicles that they
The lawsuits had accused Moody's, a unit of Moody's Corp
, and S&P, a unit of McGraw-Hill Cos, of
negligent misrepresentation over their activities regarding the
Cheyne and Rhinebridge structured investment vehicles (SIVs).
Morgan Stanley, which marketed both SIVs and helped
structure the Rhinebridge SIV, also settled. Both cases were
dismissed with prejudice. Settlement terms were not disclosed.
Spokesmen for McGraw-Hill and Morgan Stanley confirmed the
settlements, as did a person familiar with the Moody's
settlement. Moody's did not respond to requests for comment.
A trial in the Cheyne case had been scheduled for May 6.
In both cases, investors accused the rating agencies of
collaborating with the banks in arranging for SIVs to receive
ratings as high as "triple-A," even though much of the
underlying collateral was low-quality or subprime mortgage debt.
The Abu Dhabi Commercial Bank, King County in Washington
state, and other investors sought $638 million of damages
related to losses they claimed to suffer when the Cheyne SIV
went bankrupt in August 2007.
King County and the Iowa Student Loan Liquidity Corp,
meanwhile, had been seeking $70 million of damages over
Rhinebridge, which had been structured by Germany's IKB Deutsche
Industriebank AG and was wound down in August 2008.
IKB settled the Rhinebridge case last year, and credit
rating agency Fitch Ratings, a unit of France's Fimalac SA
, settled last month.
The cases are Abu Dhabi Commercial Bank et al v. Morgan
Stanley & Co et al, U.S. District Court, Southern District of
New York, No. 08-07508; and King County, Washington et al v. IKB
Deutsche Industriebank AG et al in the same court, No. 09-08387.
(Reporting by Nate Raymond and Jonathan Stempel in New York;
Editing by Gary Hill and Lisa Shumaker)