This is a securities class action lawsuit filed against Moody's Corporation.
Moody's, through its subsidiaries, provides credit ratings, research, and analysis covering fixed-income securities, other debt instruments and the entities that issue such instruments in the global capital markets. Among other things Moody's assigns ratings to mortgage bonds comprising risky "subprime" home loans, including bonds packaged as 'collateralized debt obligations' and other securities backed by subprime assets. Investors rely on these ratings to assess the value and risk of these investments. While the nation's housing market was booming, Moody's reaped millions of dollars in fees for assigning ratings to subprime-mortgage-backed securities.
The class action complaint alleges that throughout the Class Period, Moody's misrepresented or failed to disclose that Moody's assigned excessively high ratings to bonds backed by risky subprime mortgages including bonds packaged as collateralized debt obligations - which was materially misleading to investors concerning the quality and relative risk of these investments. Moreover, even as a downturn in the housing market caused rising delinquencies of the subprime mortgages underlying such bonds, Moody's maintained its excessively high ratings, rather than downgrade the bonds to reflect the true risk of owning subprime-mortgage-backed debt instruments.
Then, on July 11, 2007, Moody's shocked investors when it announced that Moody's was downgrading 399 mortgage-backed securities issued in 2006 and reviewing an additional thirty-two for downgrade, affecting approximately $5.2 billion of bonds. Moody's also disclosed that it had downgraded 52 bonds issued in 2005.
This actions artificially inflated Moody's stock price.
Name (Stock Symbol)
Moodys Corporation (MCO)
Moodys Corporation, through its subsidiaries, provides credit ratings and related research, data, and analytical tools.
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