First Amendment Lawyer Uses Free Speech Defense for S&P
Floyd Abrams doesn’t just represent media clients waging battles on behalf of truth and the American Way.
He also represents a ratings agency—Standard & Poor’s—that has been targeted for its role in the financial crisis, the New York Times reports in a profile. The ratings agency is among several that gave high grades to bundled mortgage products and other debt that went bad along with the housing market.
Dozens of investors have filed suit against the bond ratings agencies, the story says. Abrams and his colleagues at Cahill Gordon & Reindel are preparing to argue a motion to dismiss one of the cases against S&P in a July 31 hearing.
Abrams’ defense is based in part on a First Amendment kind of argument. He argues that S&P can’t be sued because it was merely voicing an opinion, the same way an editorial writer gives an opinion.
“It shouldn’t change the legal dynamics that rating agencies are more important, or play a greater role, or are looked to by this or that element of the marketplace,” he told the Times. “The major similarity here is that both the newspaper and S & P are offering opinions on matters that people can and do disagree about.”
Says the Times: “Legal scholars give this argument marks that range from ‘certainly plausible’ to ‘you’re kidding, right?’ ”
“I don’t think it’s a good legal argument, though there might be some courts that buy it,” Columbia law professor John Coffee told the Times. “I don’t think that a rating is the same as an editorial, because The New York Times’ editorial page isn’t paid for by a sponsor. The direct, commercial relationship of the issuer of the bond and the rating agency puts it into the field of commercial speech.”
