Yelling "Theater!" in a crowded fire

The ratings agencies and the First Amendment:

U.S. regulators and lawmakers are considering stricter oversight of credit-rating firms, including changing the way the firms are paid, in an effort to minimize potential conflicts. A recent 10-month study by the Securities and Exchange Commission found that rating firms put profits ahead of quality when determining ratings for mortgage-backed securities.

Yet to succeed in court, investors may need to navigate a thorny constitutional issue: Are the ratings that the services give securities -- ranging from triple-A to junk -- simply "opinion" that is protected by the First Amendment? Traditionally, the answer has been yes.

Rating firms generally enjoy a free-speech right to "make informed, thoughtful predictions about the future," says UCLA School of Law professor Eugene Volokh, a First Amendment expert. "That is no different from what newspapers or scholars do."