State Street Wins Dismissal of Shareholder Suit
Ropes & Gray secured a dismissal for client State Street Corp. and State Street Global Advisors in a putative shareholder class action suit over mortgage-related securities investments in a State Street mutual fund. In a February 25 decision, Judge Richard J. Holwell of the U.S. District Court for the Southern District of New York rejected the allegation that the bond fund's prospectus was misleading due to its description of the fund's mortgage-related holdings as "high-quality" securities. The bulk of the fund's holdings were rated either AAA or AA by recognized ratings agencies. The Court ruled that while, in hindsight, those bonds did not necessarily live up to the ratings assigned to them, the accuracy of offering documents must be assessed in the light of information available at the time the documents were published. The court also dismissed the plaintiff's allegation that State Street misstated the value of the mortgage-related holdings in the fund, as there was no indication that State Street deviated from its established valuation procedures as disclosed in the prospectus.