Credit rating agencies have deviated from their traditional roles as providers of opinion and instead co-operate closely with investment bankers to help them secure the desired ratings to sell deals to investors, a study claims. In addition, rating agencies could be held liable for investor losses on complex securities backed by risky US subprime mortgages and other assets, according to the study, which was co-authored by Josh Rosner, consultant at Graham Fisher, the investment research firm, and Joseph Mason, associate finance professor at Drexel University in Philadelphia. Any such liability could dramatically change the rating business by upsetting the agencies’ traditional position that their ratings are simply opinions covered by constitutional protections for free speech. The big three ratings agencies — Moody’s, Fitch and S&P — on Thursday dismissed the authors’ claims.

This entry was posted by Gwen Robinson on Friday, May 11th, 2007 at 5:45 and is filed under Capital markets. Tagged with fitch, moody's, s&p. Edit this entry.