Kevin Drum points out S&P Admits in Court That Its Ratings Are Ridiculous and No One Should Ever Take Them Seriously "It's true that courts have long allowed sellers to engage in what's called 'puffery.' If McDonald's says they make the world's best hamburgers, that's OK. It may be a ridiculous claim, but what do you expect them to say? 'Our burgers are pretty good if nothing else is available'? Basically, you're allowed to make vague claims about your greatness without inviting lawsuits from folks who don't like your burgers.
So when S&P says they use 'market leading software,' they're probably on firm ground. That's standard puffery. Unfortunately, 'transparent,' 'independent,' and 'objective' are a little trickier. Those words have actual meaning, and there's only so far you're allowed to stretch them. When your bond ratings are secretly based on the fact that bond issuers are paying you heaps of money for inflated scores, your claims of mere puffery are a lot less likely to succeed."