Featured Discussions - Competitive Intelligence2024-03-29T11:37:07Zhttp://competitiveintelligence.ning.com/forum/topic/list?feed=yes&xn_auth=no&featured=1Former Moody's SVP charges that its analysis is "rotten to the core."tag:competitiveintelligence.ning.com,2011-08-19:2036441:Topic:598872011-08-19T16:21:38.934ZEric Garlandhttp://competitiveintelligence.ning.com/profile/EricGarland
<p>If you wonder why the term "analyst" does not automatically confer authority and reliability, read this:</p>
<p>The former SVP of the derivatives product division at Moody's has filed a 78-page comment about the practices of his recently-former company, charging that <a href="http://www.businessinsider.com/moodys-analyst-conflicts-corruption-and-greed-2011-8" target="_blank">the analysis process is completely corrupt</a>.</p>
Here are some key points:<br></br>
<ul>
<li><strong>Moody's ratings…</strong></li>
</ul>
<p>If you wonder why the term "analyst" does not automatically confer authority and reliability, read this:</p>
<p>The former SVP of the derivatives product division at Moody's has filed a 78-page comment about the practices of his recently-former company, charging that <a href="http://www.businessinsider.com/moodys-analyst-conflicts-corruption-and-greed-2011-8" target="_blank">the analysis process is completely corrupt</a>.</p>
Here are some key points:<br/>
<ul>
<li><strong>Moody's ratings often do not reflect its analysts' private conclusions.</strong> Instead, rating committees privately conclude that certain securities deserve certain ratings--and then vote with management to give the securities the higher ratings that issuer clients want.</li>
</ul>
<ul>
<li><strong>Moody's management and "compliance" officers do everything possible to make issuer clients happy--and they view analysts who do not do the same as "troublesome.</strong>" Management employs a variety of tactics to transform these troublesome analysts into "pliant corporate citizens" who have Moody's best interests at heart.</li>
</ul>
<ul>
<li><strong>Moody's product managers participate in--and vote on--ratings decisions.</strong> These product managers are the same people who are directly responsible for keeping clients happy and growing Moody's business.</li>
</ul>
<ul>
<li><strong>At least one senior executive lied under oath at the hearings into rating agency conduct.</strong> Another executive, who Harrington says exemplified management's emphasis on giving issuers what they wanted, skipped the hearings altogether.</li>
</ul>
<div style="overflow: hidden; color: #000000; background-color: transparent; text-align: left; text-decoration: none; border: medium none;"><br/>I think this is going to inspire a much needed discussion about real analysis.</div>
<div style="overflow: hidden; color: #000000; background-color: transparent; text-align: left; text-decoration: none; border: medium none;"></div>
<div style="overflow: hidden; color: #000000; background-color: transparent; text-align: left; text-decoration: none; border: medium none;">Your thoughts?</div>
<p> </p>