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Cordray suit against ratings agencies thrown out

State AGs often use the power of their office and bad publicity to mau-mau defendants in meritless suits; perhaps that was the plan of then-Ohio AG Richard Cordray when he sued ratings agencies for violations of the Ohio Securities Act, though the ratings agencies were not sellers of securities as the act requires. A federal district court judge threw out the case this week, nothing that the "complaint identifies who the issuers of the securities were, but it does not contain even a general allegation that the issuers violated the Ohio Securities Act, let alone plead a violation with particularity." The law firms bringing the suit on behalf of Ohio were indirect donors to Cordray's campaign. [LNL]

As J.W. Verret and Michael Krauss point out in separate articles, part of the problem with the Consumer Financial Protection Bureau is that it is run by a single czar; when the SEC or NLRB exceed their authority for partisan political gain, the minority members of the commission can speak out and draw attention to the abuses. That can't happen when the decisions are made by a single individual. Krauss argues against the nomination of Cordray because of his ties to the trial bar. [Krauss @ American Thinker; Verret @ WaTi] Dodd-Frank is already vague and overbroad; if the CPFB can bring the sort of abusive lawsuits that the Ohio AG's office did, it will be problematic.

Update, October 20: see also IBD.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.