The mortgage crisis continues to generate major lawsuits. Indeed, just last week, the Department of Justice Department sued Standard & Poor's, the nation's largest rating agency, for allegedly knowingly publicizing false ratings of deficient securities, and brought multi-million dollar claims against S&P under the Financial Institutions Reform, Recovery and Enforcement Act.
More than a dozen states immediately followed the Justice Department's action, bringing their own massive lawsuits under state trade practices or unfair competition laws. Among the states, California led the way, but in addition to bringing such state claims also sued S&P for violating California's own False Claims Act, modeled after the federal act. In this way, it added a claim not used in the federal case or in the other state cases.
Alison Frankel, in a recent post on Thomson Reuters News & Insight's On the Case, explained California's involvement as, "California's false claims theory is that if it hadn't been for the S&P's ratings, the state's behemoth teachers and public employees' pension funds would have not purchased mortgage-based securities that turned out to be dogs."
Motley Rice whistleblower attorney Mark Labaton, based in the firm's California office, said, " . . . if the AG's case is not settled quickly, it could end up testing California's definition of a claim under the state False Claims Act . . . just asserting the state FCA claim, which carries treble damages just like its federal counterpart, could enhance the California AG's leverage over S&P."
Read more about this recent filing. Motley Rice whistleblower attorneys are not involved in this case but do represent clients in False Claim Act and SEC whistleblower litigation. Learn more about Motley Rice's whistleblower practice.