S&P to Use First Amendment Defense as Part of Its Effort to Fend Off Liability in Financial Meltdown Litigation

An article in the Business Section of the Sunday New York Times describes how prominent First Amendment litigator Floyd Abrams plans to defend Standard and Poor's against an avalanche of legal claims stemming from their issuance of ratings for assorted failed financial instruments by characterizing the ratings as protected speech akin to a newspaper editorial's expression of opinon. The Times notes that a number of experts, including securities scholar John Coffee, see this line of defense as flawed, especially given the financial stake the rating entities had in the investment enterprise they can be seen as advancing through the opinions they issued. In an interesting post on Concurring Opinions, Frank Pasquale presents troubling accounts of irresponsible rating agency behavior, accounts that make them unsavory candidates for a possible First Amendment safe harbor.

 

JFB