Critics have accused the credit rating agencies of helping to invite worldwide financial calamity by propping up subprime securities with too-good-to-be-true ratings, but for a long while it seemed that they would remain all-but impervious to liability for the crisis. In case after case, Standard & Poor’s Financial Services, Moody’s Corp., and Fitch Ratings Inc. managed to beat back investor claims by arguing that their wildly optimistic ratings amounted to constitutionally protected opinions.
But cracks in the rating agencies’ First Amendment armor have begun to spread in a series of decisions in private investor litigation and cases brought by state attorneys general. And now that the Justice Department has brought its own 119-page civil complaint against S&P, the agencies must be feeling more exposed than ever.
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