Free speech and the rating agencies

Now that the United States has sued Standard and Poor's over the subprime mortgage fiasco, see The S&P Lawsuit, it will be interesting to see whether S & P will raise a First Amendment defense as it has in some of the civil cases.  Some observers say that the courts are likely to give it a chilly reception. S&P Lawsuit First Amendment Defense May Fare Poorly, Experts Say. I am inclined to agree, although not because the case law wouldn't permit the courts to consider this defense. Rather, I suspect the implications for permitting the rating agency's opinions to be treated like fully protected opinions and subjected to a New York Times v. Sullivan standard, a standard under which a certain amount of falsity is protected as a necessary evil so that we can protect the speech that we value, would have intolerable implications for 10(b)5 and maybe fraud cases generally. 

Comments

[Jennifer S. Taub]

Tamara, also of interest is the SDNY decision in August.

Quoting: "At first blush, the New York cases appear to be in tension with Fait. In reality, there is no conflict — the New York cases do not treat credit ratings as pure statements of either fact or opinion but rather as a hybrid of the two. These opinions hold that ratings are actionable because they are understood to be statements of creditworthiness based on an analysis of underlying facts conducted by respected ratings organizations."

.http://newsandinsight.thomsonreuters.com/uploadedFiles/Reuters_Content/2012/08_-_August/abudhabi--SJopinion.pdf