Moody’s, S&P Rally After Abu Dhabi Settlement: New York Mover
Moody’s Corp. (MCO) and McGraw-Hill Cos., owner of Standard & Poor’s, rallied after settling a lawsuit by investors claiming the companies gave inflated grades on two structured investment vehicles.
Moody’s climbed 8.2 percent to $59.61 at 11 a.m. in New York and earlier reached $61.26, the highest intraday level since July 2007. McGraw-Hill rose 3.1 percent to $53.59 and traded as high as $55, the most since Feb. 4, the day that the U.S. Justice Department sued the world’s largest credit rater for inflated grades on mortgage-backed securities.
The investors, led by Abu Dhabi Commercial Bank (ADCB) and King County, Washington, agreed to drop their claims against Moody’s and S&P, the investors said in a notice filed in U.S. District Court in Manhattan April 26.
The plaintiffs claimed the defendants gave the Cheyne and Rhinebridge structured investment vehicles inflated ratings in two separate suits filed in federal court in Manhattan in 2008 and 2009. The rating companies worked with Morgan Stanley to structure the entities, and their compensation was based on them receiving the desired ratings, the plaintiffs claimed.
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