SLUSA Challenge Fells N.Y.-Law Suit Against S&P Over Ratings of Fannie Stock

The U.S. District Court for the Southern District of New York June 24 dismissed would-be class claims that Standard & Poor’s Financial Services LLC “intentionally, recklessly, and/or negligently” issued false and misleading ratings of certain Fannie Mae securities in violation of New York law (Tolin v. Standard & Poor’s Financial Services LLC).

In a decision by Judge Paul A. Engelmayer, the court concluded that the complaint alleges misstatements “in connection with” transactions in covered securities and thus is precluded by the Securities Litigation and Uniform Standards Act.

SLUSA was enacted to close a loophole in the 1995 Private ...