Ratings Agency Lawsuit|Crawls Along

     SANTA ANA, Calif. (CN) – A federal judge gave six banks deadlines to provide discovery materials to McGraw-Hill and Standard & Poor’s, which are defending themselves from federal prosecutors’ claim that “S&P deliberately misrepresented the integrity of its ratings in pursuit of financial gain.”
     U.S. District Judge David O. Carter on Aug. 1 issued on order on motions to compel.
     Citing his own July 16, 2013 order, Carter wrote in the new order: “‘This is a case about credit ratings – how they are created, whose interests they serve, and how they may or may not have been manipulated during the period leading up to this country’s financial meltdown.’ The Government alleges that S&P deliberately misrepresented the integrity of its ratings in pursuit of financial gain.” (Citation omitted.
     Discovery has been proceeding since Carter denied S&P’s motion to dismiss.
     “S&P has repeatedly insisted that both the Government and non-parties have ‘stiffed’ it on its discovery requests,” Carter wrote.
     To break the “discovery logjam,” Carter on May 28 ordered S&P to file motions to compel against the five largest third parties involved. S&P then moved to compel production from six nonparties: RBS Securities, the National Credit Union Administration, Bank of America/Merrill Lynch, Countrywide Securities Corp., Deutsche Bank Securities, and Citigroup Global Markets/Citibank.
     After daylong arguments before Carter on July 29, S&P and each of the nonparties represented that all of the disputes had been resolved – except those relating to the costs of production.
     Carter’s Aug. 1 order therefore does not involve the scope of any discovery request, merely who will pay for it.
     He ordered all the nonparties to complete its production of documents within 45 days of the order. He “expects that each nonparty’s account of its claimed expenses will be specific and lean.”
     At that point, he will consider any sanction S&P wishes to bring against any nonparties who failed to comply with his order, and he will consider allocating costs.

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