Fitch, Moody’s Dropped From California Case Against Ambac

Moody’s Corp. and Fitch Ratings Ltd. were dropped from an antitrust lawsuit claiming Ambac Financial Group Inc. and credit rating companies conspired to force local governments in California to purchase insurance they didn’t need, a lawyer for the plaintiffs said.

Claims against Moody’s and Fitch defendants have been “resolved,” Joseph Cotchett, an attorney for cities and counties suing Ambac, told Judge Richard Kramer at a hearing in state court in San Francisco. He didn’t provide details. Standard & Poor’s was also sued.

The 2008 lawsuit alleges ratings companies and bond insurers agreed to maintain high credit ratings for the insurers and perpetuate a dual credit-rating system that punished cities with lower ratings than corporate entities.

Attorneys for Ambac and ratings companies have denied the allegations and have asked Kramer to throw the case out.

Daniel Noonan, a Fitch spokesman, and Michael Adler, a Moody’s spokesman, didn’t immediately respond to e-mail messages seeking comment about the development.

The case is Ambac Bond Insurance Cases, CJC-08-004555, Superior Court of California, County of San San Francisco (San Francisco).

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