Moody's, Fitch and S & P Are Protected Speech, Judge Rules California

Ratings by Moody's Investors Inc., Standard & Poor's and Fitch Ratings Ltd. are protected speech, a California judge said in a provisional ruling in a lawsuit of $ 1 billion for the Public Employees Retirement System California against companies .

Judge Richard Kramer in state court in San Francisco, said today that scores of companies in the three structured investment vehicles that lost pension money is a form of speech on a topic of public interest is protected a California law designed to defend the cases meant to cool the debate.

The law aims to protect the good guys trying to exercise freedom of speech of his adversaries who try to stifle the voice by submitting claims without merit, "said Kramer.

"There is a public interest in the country's economy and the types of investment opportunities that exist," Kramer said in a hearing today. "They are potentially good here."

Calpers is suing the three bond rating firms in July 2009 for losses it said were caused by its risk assessments "very vague" on three structured investment vehicles. The IMS call, after receiving of the most high ratings in 2006, collapsed in 2007 and 2008, the complaint says Calpers.

Anti-SLAPP

Moody's and the two companies are looking for other qualifications that the case be dismissed under California law on anti-SLAPP. The 1992 law was passed in California in response to lawsuits filed by real estate developers and other businesses against opponents to their projects. SLAPP stands for "strategic lawsuits against public participation."

The resolution does not end the case, said Kramer. Calpers, the largest U.S. pension fund, may seek to demonstrate that it is likely to win on the merits of his claim. In May, rejected the request of companies index "to close the case, saying the issue of ratings SIV is not a matter of public interest, but an" activity designed for the sole purpose of making money "is not protected by the First Amendment.

Kramer said today that its earlier decisions "have absolutely nothing to do with this hearing." The earlier ruling on the dismissal did not consider whether the ratings were protected speech under the terms of the anti-SLAPP law.

The companies gave their highest rating of Cheyne Finance LLC, Stanfield Victoria Funding LLC and Sigma Finance Inc., which led Calpers to invest $ 1.3 billion in 2006, the fund said in its complaint.

Specific buyers

The SIV, bearer bonds could only be sold to specific classes of buyers. SIV's underlying assets were known only to the SIV and ratings companies, which published the ratings on the materials available on its website for a short period and in the private financial information services, the complaint said Calpers. The underlying assets of the three SIV consisted primarily of subprime mortgages at risk, the report said.

José del Snuff, a lawyer for Calpers, Kramer said the ratings companies were working "hand and glove" with customers and structured the SIV could not be sold to investors without ratings.

Kramer said that no matter which not only the dissemination of skills to select investors who could buy. He said that making predictions about the economic performance of investment vehicles is protected speech and it's up to Calpers to demonstrate that his claims have substance.

"No Refuge Behavior '

The anti-SLAPP law "not the behavior of shelter," said Kramer. Calpers can now search for information on business classifications to support his claims, he said.

The snuff, said Calpers would review the options and expects to prevail.

"We are pleased that once the judge had the opportunity to look beyond bare allegations by the applicant, confirmed that the ratings are a form of protected speech," said Michael Adler, a spokesman for Moody's in New York.

"We are very happy with this decision, which reaffirmed the longstanding precedent that credit opinions be considered protected speech," said Daniel Noonan, a spokesman for Fitch said in an e-mail.

Edward Sweeney, S & P spokesman did not immediately return a call.

The case is Calpers v. Moody's, 09-490241, Superior Court of California, County of San Francisco.