S&P seeks to move 16 ratings lawsuits to federal court
By Jonathan Stempel
(Reuters) - Standard & Poor's on Wednesday began trying to move lawsuits by 15 states and Washington, D.C., over its credit ratings to federal court from state court, hoping to limit its liability in one of the biggest fraud cases tied to the financial crisis.
In multiple court filings, the McGraw-Hill Cos MHP.N unit said the "wave" of civil lawsuits raises "significant" federal regulatory and constitutional issues that should be addressed all at once, to help ensure that national securities markets operate efficiently.
S&P also said the potential for a "patchwork" of state court injunctions governing its conduct could thwart Congress' intent to give the Securities and Exchange Commission primary oversight over the ratings process, and perhaps unduly impede its ability to function.
Such a patchwork "would have the effect of making the most restrictive element from each such injunction the 'de facto' national standard," lawyers including First Amendment specialist Floyd Abrams argued in briefs filed for S&P.
Connecticut Attorney General George Jepsen leads a coalition of state attorneys general that brought the state cases.
These were announced on February 5, the same day that the Department of Justice said it was seeking $5 billion in its own civil lawsuit against S&P.
Experts said S&P might struggle to move the state cases.
"My intuition is that S&P faces an uphill battle," said Gil Seinfeld, a University of Michigan law professor specializing in federal courts and jurisdiction. Continued...