Analyst Sues Moody’s, Saying He Was Unjustly Fired

March 30, 2009

A former Moody’s Investors Service equity analyst has sued the credit rating firm, saying he was fired for blowing the whistle on a supervisor’s ethical lapse.

Paul Bienstock said in the lawsuit filed Wednesday in U.S. District Court in Manhattan that the supervisor overruled his recommendation at a December 2007 meeting to upgrade the rating on the prescription benefits company, Express Scripts Inc.

He said the supervisor told the meeting that Express Scripts did not deserve an upgrade because it didn’t pay Moody’s or visit the ratings firm.

“Express Scripts doesn’t pay us (Moody’s) and we don’t cover their issues. They don’t visit us and they don’t deserve our upgrade,” he quoted the supervisor as saying.

Moody’s spokesman Michael Adler said the company had thoroughly investigated Bienstock’s claims and found them “completely without merit.” He said Moody’s intended to “vigorously” defend itself against the lawsuit.

Adler also said Bienstock’s position at Moody’s was eliminated as part of a publicly announced reduction in force. The company had identified his job as part of the layoff before the meeting that became the basis of the lawsuit.

Adler said Moody’s had clear policies in place to prevent rating committees such as the one that considered whether to upgrade Express Scripts from taking commercial considerations into account when they assign a rating.

The supervisor named in the lawsuit is no longer employed by Moody’s.

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