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July 9, 2013

U.S. Suit Against S&P Tentatively Allowed to Proceed

A U.S. district judge Monday said he would tentatively allow the Justice Department’s lawsuit against Standard & Poor’s Ratings Services to move forward, a boost to one of the U.S. government’s biggest financial-crisis-era cases.

U.S. District Judge David O. Carter for the Central District of California in Santa Ana said that he tentatively rejected S&P’s bid to dismiss outright the federal government’s lawsuit but cautioned that he would make a final ruling by July 15.

Representatives for S&P and the Justice Department declined to comment on the judge’s statements.

Judge Carter made the ruling after he heard several hours of arguments from lawyers on both sides of the $5 billion lawsuit.

A tentative ruling, like the one issued on Monday, is often an indication of how a judge is likely to rule eventually, lawyers say. The purpose of such a ruling is typically to narrow the focus of the plaintiffs’ and defendants’ arguments before a judge.

The Justice Department sued S&P for alleged fraud on Feb. 4, saying the world’s largest credit-rating firm intentionally misled investors who bought highly rated securities linked to mortgages about the risks of those deals.”

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Read full Wall Street Journal article here

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