Moody's Corp. won dismissal of a lawsuit by a pension fund claiming the credit ratings firm made false statements about its independence and objectivity.
U.S. District Judge George B. Daniels in Manhattan found that the $1.1 billion Teamsters Local 282 Pension Trust Fund, Lake Success, N.Y., failed to establish that Moody's violated securities laws, according to a ruling issued Aug. 23.
The pension fund, an investor in New York-based Moody's, argued the company succumbed to conflicts of interest when it assigned faulty ratings to structured securities products before the financial crisis.
The pension fund alleged that Moody's stock dropped after questions arose about the mortgage-backed securities and other products the firm had rated highly. Moody's and other ratings companies began downgrading those securities around 2007.
“Plaintiffs must proffer some evidence demonstrating that Moody's specific alleged misrepresentations caused the materialization of the risk that Moody's rating practices were unsustainable,” Mr. Daniels wrote. “They fail to do so.”