It is fitting that the application of the constitutional amendment protecting US freedom of speech ranges far and wide beyond its literal text. But the effect of this is that the outer boundaries of first-amendment protection are fuzzy. One broad-brush distinction holds that newspapers are protected from regulation and litigation. Hence, the credit rating agencies’ insistence that their ratings are an opinion, much the same as a newspaper editorial. However, speech as part of commercial activity is not protected.

That is why shares in Moody’s and McGraw-Hill, which owns Standard & Poor’s, slumped this week after a judge allowed a case against them to proceed, ruling that freedom of speech protections did not necessarily apply. This, however, is merely a glancing blow to the shield successfully used by the agencies in such cases. First, the ruling was based on the plaintiffs’ (as yet unproven) assertion that the ratings, of notes in a structured investment vehicle, were disseminated only to a select group – and were not, therefore, a matter for public concern. The judge, in fact, described the general principle of first-amendment protection as “well-established”. Second, only one of 11 claims against the agencies was allowed to proceed, that of fraud. Arguing whether ratings were issued in bad faith takes this case well beyond the first-amendment debate.