Court Denies S&P’s Motion to Dismiss State of California’s $600M Suit

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Explore:  False Claims Act RMBS S&P

On August 14, Judge Curtis E.A. Karnow of the Superior Court of California, County of San Francisco, denied Standard & Poor’s motion to dismiss a suit by the State of California. The Attorney General’s claims under the False Claim Acts and other statutes allege over $600 million in losses to investors, including state pension funds, due to S&P’s allegedly knowingly faulty ratings of RMBS. S&P argued that any injury to the state pension funds was not to “money” of the State, which it maintained is a requirement for a claim under the False Claim Act, and also that the suit was time-barred. The court denied the motion, concluding that S&P had not established that the lost money in the case did not constitute a potential or actual injury to the public treasury, and that the complaint sufficiently alleges discovery of the alleged wrongdoing within three years of the 2011 tolling agreement between the parties. Decision.