News: CalPers is suing the Big 3 ratings agencies for false representation of toxic SIVs.
Inquiring minds want to know: will they get anywhere with this fight?
Lawyers will be paid big bucks to argue the fine points of the law; an outline of possible issues is available to legal scholars in a recent article from the Columbia Business Law Review. For the rest of us, the Huffington Post has talked to one legal expert who describes the legal landscape of this battlefield.
Would you be surprised to learn that there's no law requiring the ratings agencies to have a clue what they are doing? Supposedly, the market forces them to be accurate to protect their reputations (hah!). The ratings are indeed protected by the First Amendment, under current court precedents, as "commercial speech."
You got that? The truthiness of the ratings, on the basis of which billions of dollars of pension fund money is invested, is judged by the same legal standard as ADVERTISING!
Wow, a whole new outrage. As soon as I catch my breath from the last ten, I will write to my senators about this.
Disclosure: no positions.