Connecticut Superior Court Rejects Moody’s Motion To Strike Claims In Pursuit Partners, LLC V. UBS AG, ET AL
A Connecticut Superior Court Judge has rejected the arguments of credit rating giant Moody’s Investor Services that it is entitled to First Amendment protection in the fraud case being brought by hedge fund Pursuit Partners, LLC.
The Connecticut trial court judge, presiding over the Complex Litigation Docket, also ruled that Moody’s is not entitled to insulation from liability for those claims under either the Martin Act [NY] or the Credit Rating Agency Reform Act of 2006 (“CRARA”), rejecting Moody’s arguments as untenable in this case.
The Court’s ruling means that the Plaintiffs will have the opportunity to have a jury hold Moody’s accountable for its actions in court, and that Moody’s will not be able to hide behind these defenses at trial. In ruling on Moody’s Motion to Strike on March 8, the Court found that Pursuit Partners had properly stated claims against Moody’s and that Moody’s was not entitled to have the case dismissed on constitutional or preemption grounds.
This decision will now allow Burg Simpson’s client, Pursuit Partners, to move forward with claims of fraud, aiding and abetting, negligence/reckless conduct, civil conspiracy and violations of securities laws, in relation to the hedge fund’s lawsuit against the Swiss bank UBS AG and Moody’s. Pursuit has alleged that UBS and Moody’s conspired together to defraud Pursuit out of over $50,000,000 in the sale of RMBS CDOs. The case is scheduled for a jury trial to be conducted on the Complex Litigation docket starting January 8, 2013, in the Connecticut Superior Court sitting in Stamford, CT.
See: PURSUIT PARTNERS, LLC AND PURSUIT INVESTMENT MANAGEMENT, LLC. V. UBS AG, SECURITIES LLC, ROBERT MORELLI, MOODY’S CORPORATION, Fifth Amended Complaint, Case: D.N. X08 CV 08 4013452 S
In determining that Moody’s should not be able to avoid liability as asserted in the Motion to Strike, the judge rejected Moody’s claims that they are entitled to Constitutional protection under the First Amendment.
The Court found that the allegations made by Pursuit Partners “provide a sufficient factual basis to overcome the claim of constitutional protections of the First Amendment.” The Court also specifically ruled that Moody’s conduct, as detailed by Pursuit Partners in the Complaint, is beyond the conduct regulated by CRARA, and thus CRARA does not preempt the State law claims asserted by Pursuit in this lawsuit.
Michael S. Burg, lead counsel for the Plaintiffs in this action and the founding shareholder of Burg Simpson, said: “I am gratified that the Court denied Moody’s Motion to Strike. This legal maneuver is nothing more than Moody’s attempt to evade responsibility for their actions. The Order of the Court gives the Plaintiffs the opportunity to be heard on their very serious claims that Moody’s conspired together with UBS to defraud the Plaintiffs in the sale of these CDO’s.”
“This case is the best example I have seen,” said Mr. Burg, “of the greed on Wall Street. It demonstrates how the rating agencies worked together with investment banks to make windfall profits. And we all know the effect that had on our world’s economy.”
Mr. Burg indicated that the Plaintiffs are looking forward to their day in Court. “My clients welcome the opportunity for the jury to hear all of the evidence in this matter, and we are confident that justice will prevail. My clients need to be made whole.”
The trial is expected to last two months, and will include claims of fraud, violation of the Connecticut Securities Act, and other claims.
Case: D.N. X08 CV 08 4013452 S – PURSUIT PARTNERS, LLC AND PURSUIT INVESTMENT MANAGEMENT, LLC. V. UBS AG, SECURITIES LLC, ROBERT MORELLI AND MOODY’S CORPORATION, Superior Court, Judicial District of Stamford/Norwalk at Stamford, Memorandum of Decision Motion of Strike (Docket No. 347), March 8, 2012.