Moody's Corporation - Securities Class Action

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Stanford Law School

Moody's Corporation Summary: The original complaint filed in the U.S. District Court for the Northern District of Illinois, Nach, et al. v. Huber, et al., case number 07-CV-04071, alleges violations of the Securities Exchange Act of 1934. Moody's Corporation, through its subsidiaries, provides credit ratings, research, and analysis covering fixed-income securities, other debt instruments and the entities that issue such instruments in the global capital markets. Among other things, the Company assigns ratings to mortgage bonds comprising risky "subprime" home loans , including bonds packaged as "collateralized debt obligations" and other securities backed by subprime assets. Investors rely on these ratings to assess the value and risk of these investments. While the nation's housing market was booming, Moody's reaped millions of dollars in fees for assigning ratings to subprime-mortgage-backed securities.

Specifically, the complaint alleges that throughout the Class Period, Defendant misrepresented or failed to disclose that the Company assigned excessively high ratings to bonds backed by risky subprime mortgages including bonds packaged as collateralized debt obligations - which was materially misleading to investors concerning the quality and relative risk of these investments. Moreover, even as a downturn in the housing market caused rising delinquencies of the subprime mortgages underlying such bonds, Moody's maintained its excessively high ratings, rather than downgrade the bonds to reflect the true risk of owning subprime-mortgage-backed debt instruments.

Then, on July 11, 2007, Moody's shocked investors when it announced that the Company was downgrading 399 mortgage-backed securities issued in 2006 and reviewing an additional thirty-two for downgrade, affecting approximately $5.2 billion of bonds. The Company also disclosed that it had downgraded 52 bonds issued in 2005.

On September 26, 2007, a similar purported class action complaint, 07-CV-08375, was also filed in the U.S. District Court for the Southern District of New York. On December 12, 2007, Northern District of Illinois Judge Ruben Castillo granted the motion to appoint Teamsters Local 282 Group and Lewis Wetstein, M.D., as co-lead plaintiffs and granted the selection of lead and liaison counsels. The law firms Glancy Binkow & Goldberg LLP, Kirby McInerney, LLP and Schiffrin Barroway Topaz & Kessler, LLP were approved as co-lead counsel, and the law firm of Pomerantz Haudek Block Grossman & Gross LLP was approved as local counsel. On February 7, 2008, the Nach action filed in the U.S. District Court for the Northern District of Illinois was transferred to the U.S. District Court for the Southern District of New York. Further, on May 28, 2008, the Nach action was consolidated into Lead Case, 07-CV-8375. On June 27, 2008, a Consolidated Amended Complaint was filed. On September 26, 2008, the defendants filed a motion to dismiss the Consolidated Amended Complaint.

According to an article dated February 23, 2009, the judge rejected attempts by the rating agency to dismiss the case, which accuses the company and CEO Raymond McDaniel of securities fraud. But the judge did narrow the lawsuit, and threw out claims against former Moody's Investors Service Chief Operating Officer Brian Clarkson and Michael Kanef, the company's chief regulatory and compliance officer. The judge, Shirley Wohl Kram of U.S. District Court in Manhattan, said the plaintiffs -- a group of Moody's shareholders led by the Teamsters Local 282 Pension Trust Fund and two individuals -- could try to revive the dismissed claims by refiling them in a different form.

On March 5, 2009, the defendants filed a motion for reconsideration from the February 23, 2009 Opinion and Order # 97128 granting in part and denying in part the defendants’ motion to dismiss the Consolidated Amended Complaint. On April 29, 2009, the Court denied the motion for reconsideration. On May 5, 2009, a notice was filed appointing a special master for the purpose of overseeing discovery and settlement negotiations in this litigation. On May 27, 2009, Judge Shirley Wohl Kram appointed Paul D. Wachter as special master for the purpose of overseeing discovery and settlement negotiations in this litigation. On January 22, 2010, the plaintiffs filed a motion to certify the class. The motion was denied on March 31, 2011.

INDUSTRY CLASSIFICATION:
SIC Code: 7320
Sector: Services
Industry: Business Services

COMPANY/ISSUER NAME:	Moody's Corporation
COMPANY/ISSUER TICKER:	MCO
COMPANY WEBSITE:	http://www.moodys.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Raphael Nach, et al. v. Linda Huber, et al.

COURT: N.D. Illinois	DOCKET NUMBER: 07-CV-04071
JUDGE NAME: Hon. Ruben Castillo
DATE FILED: 07/19/2007	SOURCE: Notice of Filing
CLASS PERIOD START: 10/25/2006	CLASS PERIOD END: 07/10/2007
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Kirby McInerney & Squire LLP 830 Third Avenue 10th Floor, New York Ave, NY, 10022 (voice) 212.317.2300, (fax) , O'Rourke Katten & Moody 161 North Clark Street, Suite 2230, Chicago, IL, (voice) 312.849.2020, (fax) , info@okmlaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Complaint - Jury Trial Demanded
Type: Complaint		Date on the document: 07/19/2007
U.S. District Court Civil Docket
Type: Docket		Date on the document: 02/20/2008

REFERENCE COMPLAINT

In re Moody's Corporation Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 07-CV-08375
JUDGE NAME: Hon. Shirley Wohl Kram
DATE FILED: 06/27/2008	SOURCE: Docket
CLASS PERIOD START: 02/03/2006	CLASS PERIOD END: 10/24/2007
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Glancy Binkow & Goldberg LLP (NY) 1501 Broadway, Suite 1416, New York, NY, 10036 (voice) 917.510.000, (fax) 646.366-089, info@glancylaw.com Kirby McInerney LLP (Former) 830 Third Avenue 10th Floor, New York, NY, 10022 (voice) 212.317.2300, (fax) , Schiffrin Barroway Topaz & Kessler, LLP (Radnor) 280 King of Prussia Road, Radnor, PA, 19087 (voice) 610.667.7706, (fax) 610.667.7056, info@sbtklaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE REFERENCE COMPLAINT
Complaint - Jury Trial Demanded
Type: Complaint		Date on the document: 09/26/2007
Stipulation and Order on Scheduling and Consolidation
Type: Order of Consolidation		Date on the document: 4/28/2008
Consolidated Amended Complaint
Type: Complaint		Date on the document: 06/27/2008
Defendants’ Memorandum Of Law In Support Of Their Motion To Dismiss The Consolidated Amended Complaint
Type: Memorandum		Date on the document: 09/26/2008
Notice Of Motion Of Defendants To Dismiss The Consolidated Amended Complaint
Type: Motion		Date on the document: 09/26/2008
Plaintiffs’ Memorandum Of Law In Opposition To Defendants’ Motion To Dismiss The Consolidated Amended Complaint
Type: Memorandum		Date on the document: 11/17/2008
Opinion and Order
Type: Order		Date on the document: 02/18/2009
Notice Of Defendants’ Motion For Reconsideration And Correction Of The Record
Type: Motion		Date on the document: 03/05/2009
Opinion And Order
Type: Order		Date on the document: 04/29/2009
U.S. District Court Civil Docket
Type: Docket		Date on the document: 05/07/2009
Memorandum Decision And Order
Type: Order		Date on the document: 03/31/2011
U.S. District Court Civil Docket
Type: Docket		Date on the document: 03/31/2011
U.S. District Court Civil Docket
Type: Docket		Date on the document: 07/20/2011
Mandate
Type: Other		Date on the document: 07/21/2011

OTHER DOCUMENTS
U.S. District Court Civil Docket
Case Name and/or Number: Raphael Nach, et al. v. Linda Huber, et al.
Type: Docket		Date on the document: 02/13/2008
U.S. District Court Civil Docket
Case Name and/or Number: Raphael Nach, et al. v. Linda Huber, et al.
Type: Docket		Date on the document: 5/28/2008

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