ISAC

Moody’s Slips Indemnification Language in to Application

Moody’s Investors Services has recently, quietly, added broad indemnification language to its issuer rating applications that would require the local government issuer to pay Moody’s legal costs for lawsuits, as well as pay the amount of any judgments rendered against Moody’s that are related to the rating of the issuer’s securities, barring only “fraud, dishonesty, and/or willful misconduct” on the part of Moody’s.  Although many attorneys are questioning the enforceability of such provisions against local governments, please read these agreements carefully and speak to your county attorney before signing, as the agreement amounts to a contract between the issuer and Moody’s.  Please click here for the actual application containing the problematic provision, which appears at the top of page two.