Title: Credit Rating Agencies and the First Amendment Defence in the US
Abstract: Credit rating agencies (CRAs) are vital to the operation of the global financial markets. They rate the ability of debtors to make timely interest payments and the likelihood of default. In the wake of the US subprime mortgage crisis, the credit rating industry sustained sharp criticism as it was revealed that they had systematically inflated ratings of mortgage-‐backed securities in the years prior to the crisis. As a result, investors that have suffered losses in the crisis filed lawsuits against the credit rating agencies. Furthermore, lawmakers in financial-centre-nations regulated the credit rating agencies extensively.This article provides an overview of a particular aspect of the US civil liability suits that have been filed against the three dominating credit rating agencies Moody’s, Standard & Poor’s and Fitch Rating. More specifically, the article concerns the CRAs’ argument that their credit ratings are mere statements of opinion that are shielded by the First Amendment to the US Constitution. The First Amendment is part of the Bill of Rights and states, in relevant part: ‘Congress shall make no law… abridging the freedom of speech, or of the press’. The CRAs argue that they are members of the press and that their rating information is an opinion that is either immune from liability altogether or, alternatively, that to impose liability the plaintiff has to show that the rating information is made with ‘actual malice’. The last section of this article summarises the conclusions and briefly discusses the freedom of speech argument from a European, particularly from a Swedish, point of view.
Publication Year: 2016
Publication Date: 2016-12-20
Language: en
Type: article
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