On Monday, Judge Shirley Wohl Kram of the U.S. District Court for the SDNY denied Moody’s motion to dismiss a securities class action filed against the company. Reuters reports that the case accuses the company and CEO Raymond McDaniel of making false and misleading statements in order to artificially bolster Moody’s stock price, and of falsely claiming it was an independent body that published ratings accurately and impartially. The court found that facts alleged by the plaintiffs “belie defendants’ claims of independence and ratings integrity,” Reuters reports.
Judge Kram did narrow the lawsuit, however, dismissing claims against former Moody’s Investors Service COO Brian Clarkson as well as against Michael Kanef, the company’s chief regulatory and compliance officer. The court also ruled that the plaintiffs could amend their complaint to attempt to properly plead the dismissed claims.
Following the ruling, Moody’s stated
“Although we are disappointed that the court did not dismiss the lawsuit entirely, we recognize that it is very difficult to prevail on a motion to dismiss …” the company said. “We are pleased that the court still recognized many flaws in this lawsuit and dismissed a substantial part of the case.”
Ira Press, an attorney for the Moody’s shareholders, added that plaintiffs were reviewing whether to try to get the dismissed claims reinstated.