Analysts and Lawsuits

Law suits can arise when credit rating agencies, who judge the quality of bond or derivative issues, are considered the cause of investors’ loss of money. Making it easier to sue can thus open a can of worms.

The First Amendment is supposed to guard free speech. That usually protects financial analytical reports. Including opinions on Structured Investment Vehicles or SIVs, or derivatives, or any form of corporate and municipal bond.

Can analysts and their employers be sued for malpractice if their opinions have been wrong? Or are they covered by the First Amendment? What does any court decision do to those who evaluate due diligence in the future? Every so often a move is made to sue credit agencies for alleged malpractice. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)