Greenlight's Einhorn says shorting McGraw-Hill
09.08.09, 11:02 AM EDT
NEW YORK, Sept 8 (Reuters) - Greenlight Capital's David Einhorn, the hedge fund manager who in May said he was selling short shares of ratings agency Moody's Corp, on Tuesday told Reuters he was now also shorting McGraw-Hill Cos Inc , parent of rival agency Standard & Poor's.
Einhorn, in an email exchange, said he commenced the short sale after a federal court judge Wednesday handed down a ruling that will allow an investor lawsuit against the two rating agencies and Morgan Stanley to proceed.
In an interview Friday, Einhorn told Reuters the court ruling could potentially open the door to enormous and overwhelming legal costs at the two rating agencies. Einhorn's views have been watched widely since he accurately warned that Lehman Brothers Holdings Inc had taken on too much risk with too little capital, several months before the investment bank filed for bankruptcy a year ago.
Dozens of investors have sued the agencies for granting top credit ratings to asset-backed bonds and structured products, built on a foundation of risky subprime mortgages. These securities plunged in value during the global financial crisis that took hold in 2007.
Shares of McGraw-Hill, which also publishes Business Week magazine, are down 1.9 percent in early trading. Moody's stock fell 3.5 percent.