By: Jonathan Stempel – Reuters

Moody's Investors Service was ordered to defend against a lawsuit by a whistleblowing former analyst who claimed it illegally retaliated against him for questioning its ratings practices for risky mortgage debt.

A federal judge said Ilya Eric Kolchinsky may pursue his claim that the credit rating agency and its parent Moody's Corp violated the Sarbanes-Oxley corporate governance law through several employment actions, including cuts in pay and responsibilities, ending with his September 2009 suspension.

"Kolchinsky has sufficiently alleged that Moody's took 'unfavorable personnel action' against him after he reported what he believed were potential violations of the federal securities laws and SEC rules," U.S. District Judge Paul Crotty wrote, referring to the U.S. Securities and Exchange Commission.

This article can be found in its entirety on the Chicago Tribune website.