Judge Denies S&P’s Motion to Dismiss Claims Brought By Illinois AG

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On November 7, Judge Mason of the Circuit Court of Cook County, Illinois ruled that the Illinois Attorney General’s state law deceptive business and trade practice claims against Standard and Poor’s survived S&P’s motion to dismiss. The Illinois AG alleges that S&P deceived the public by stating that its process for rating securities was independent, objective, and unbiased while in fact S&P permitted a “profit motive” to override its objectivity and independence. The Court found that the conduct alleged had a sufficient nexus to Illinois to subject S&P to potential liability under the Illinois Consumer Fraud Act. The Court further found that the alleged misstatements by S&P concerning its independence and objectivity were actionable representations of fact, rather than non-actionable opinions as S&P had argued. The Court rejected S&P’s arguments that the claims were preempted by federal law and that S&P was exempt from state law under an exemption for “highly regulated” entities. Finally, the Court ruled that the First Amendment did not shield S&P from liability because the claims concerned statements about the objectivity of the ratings process, not the ultimate ratings opinions. Order.