Subprime investors take S&P and Moody’s to court

Some investors who took a hit from investments loaded with bad mortgages will soon be going to court against the top ratings agencies, reports FT.com.

“The trial, scheduled to start in New York federal court on May 6, will be the first to test the strength of evidence against not only S&P but also Moody’s, its rival….At issue is whether S&P and Moody’s defrauded investors, including Abu Dhabi Commercial Bank, which bought bonds issued by a structured investment vehicle called Cheyne. This vehicle purchased billions of dollars of subprime mortgage derivatives and other debt between its launch in 2004 and its collapse in 2007, causing the investors losses,” the report explains.

Read more here.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.