In an interview Tuesday, Greenlight Capital’s David Einhorn told CNBC he’s bet big that Moody’s (NYSE:MCO), which operates the ratings agency Moody’s Investors Services, and Standard & Poor’s, a subsidiary of McGraw Hill, are set to lose billions after a judge ruled the pair must defend themselves against fraud claims. Einhorn said that he’d been shorting the two “for a long time.”
After Einhorn’s interview, McGraw Hill CEO Terry McGraw tried to calm investor fears, saying the market “misunderstood” the ruling and that he was “pleased” with it. Judge Scheindlin’s ruling last Wednesday to allow ‘fraud’ case to continue could determine whether other lawsuits brought against ratings agencies tied to their initially top-notch ratings to investments backed by subprime mortgages are allowed to continue as well.
Rating Agency ‘Landmark’ Ruling
