Italian prosecutor charges S&P, Fitch

Written By Unknown on Senin, 12 November 2012 | 23.53

AN Italian prosecutor has filed charges of market manipulation against Standard & Poor's and Fitch ratings agencies over downgrades of Italy's credit rating that helped fuel the euro debt crisis.

Following a two-year investigation, prosecutor Michele Ruggiero requested charges against seven people at two of the world's top three ratings agencies.

Five of the accused worked at S&P's, while the other two worked at Fitch at the time.

The agencies "intentionally provided financial markets with biased and distorted information", the prosecutor's office said in a statement on Monday.

It is a landmark case since rating agencies came under concentrated attack, particularly from governments as the eurozone crises intensified.

Those charged are accused of setting out to "destabilise Italy's image, prestige and credit confidence on the financial markets, alter the value of Italian bonds by depreciating them (and) weaken the euro", the statement said.

Among those charged are Deven Sharma, the head of S&P's from 2007 to 2011, and the operational director for Fitch, David Riley.

The charges have to be confirmed by a judge for any trial to go ahead - a process that could take months under the Italian judicial system.

The ratings agencies have co-operated with the inquiry but insist their economic evaluations were independent and based on objective factors.

"These claims are entirely baseless and without any merit as our role is to publish independent opinions about creditworthiness according to our public and transparent methodologies," S&P's said in a statement.

"We will continue to perform our role without fear or favour," it said.

The probe began in 2010 after an Italian consumer group lodged a complaint over a sovereign downgrade by Moody's, the other top world rating agency, which has since been cleared by investigators and is no longer part of the case.

Investigators have since focused on more recent rating actions, particularly last year, when market turmoil pushed Italy to the brink of bankruptcy.

The case is being seen as one of the first of its kind on sovereign ratings.

Standard & Poor's earlier this month lost a landmark case in Australia in the first trial of its kind over top-flight ratings given to financial products that collapsed in the build-up to the 2008 global economic crisis.

Dozens of cases have been brought around the world against rating agencies - which were widely criticised for overly optimistic assessments of financial products that turned out to be toxic - but few trials have gone ahead.


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