First Department Affirms Dismissal of Investor Claims Against Rating Agencies as Time-Barred

On February 10, 2017, the First Department issued a decision in Varga v. McGraw Hill Financial, Inc., 2017 NY Slip Op. 01131, affirming the dismissal of RMBS investor claims against rating agencies as time-barred, explaining:

Plaintiff's claims were brought more than six years after the last purchase of securities (CPLR 213[8]) and thus are time-barred.

Plaintiffs' contention that they did not sustain an injury until after the purchase of the securities, and that therefore the fraud claim could not have accrued before then, is belied by their pleadings, which reflect an understanding that the securities were worth less than their price at the time of purchase. Plaintiffs' reliance on New York City Tr. Auth. v Morris J. Eisen, P.C., is misplaced, since the payments in this case were made at the time of purchase.

To the extent plaintiffs allege holder claims, i.e., fraudulent inducement to continue to hold the securities, these claims violate the out-of-pocket rule governing damages recoverable for fraud, and are not actionable.

(Internal quotations and citations omitted).