S&P wins transfer of ratings lawsuits to New York

Thursday, June 6th, 2013 | Finance News

By Jonathan Stempel and Luciana Lopez

(Reuters) - Standard & Poor's and its parent company McGraw Hill Financial Inc on Thursday won a ruling that moves 15 lawsuits in which they were accused of fraudulently inflating credit ratings to a single federal court.

The U.S. Judicial Panel on Multidistrict Litigation said it would promote efficiency to move the lawsuits by 14 U.S. states and Washington, D.C. to a federal court in New York, where they will be overseen by U.S. District Judge Jesse Furman.

It rejected the states' arguments that moving the lawsuits to New York, where McGraw Hill is based, would be inconvenient for them, and was also unnecessary in light of the historic cooperation among state attorneys general.

"Even though we have never centralized litigation comprised solely of sovereign enforcement actions such as these, centralization is appropriate in light of the significant factual overlap," the panel said. "The inconvenience to S&P of litigating in numerous different districts, as well as state courts, is high, and centralization allows for all parties to obtain substantial efficiencies in dealing with common issues."

The lawsuits being moved were filed in Arizona, Arkansas, Colorado, Delaware, the District of Columbia, Idaho, Iowa, Maine, Mississippi, Missouri, North Carolina, Pennsylvania, South Carolina, Tennessee and Washington.

Gregory Strong, a Delaware deputy attorney general who helped lead the states' case, did not immediately respond to a request for comment. McGraw Hill was also not immediately available for comment.

Most of the state lawsuits were filed on the same day that the U.S. Department of Justice hit Standard & Poor's with its own $5 billion lawsuit.

That lawsuit, filed under the Financial Institutions Reform, Recovery, and Enforcement Act, accused S&P of inflating ratings on structured finance securities to win more business from issuers, while touting its ratings independence and objectivity.

S&P has called that lawsuit meritless. It also faces ratings lawsuits in California, Connecticut and Illinois state courts, which are not being consolidated.

The case is In re: Standard & Poor's rating Agency Litigation, U.S. Judicial Panel on Multidistrict Litigation, No. MDL-2446.

(Reporting by Luciana Lopez and Jonathan Stempel in New York; Editing by Andrew Hay, Bernard Orr)