Here is something very embarassing: italian prosecutors accuse rating agencies of “false, unfounded” judgements.This is the proof of how wrong the mindset about market and right in italian public administration is. Firstly because it’s not true: judgements for Italy are far from false and unfounded; probably they are too light. Secondly because, even if the judgements would have been objectively wrong, who give them the right to accuse someone for it? Who the hell do prosecutor think they are?
(ANSA) – Rome, November 12 – Prosecutors in the southern Italian town of Trani on Monday requested managers of Standard & Poor’s and Fitch be indicted for alleged market tampering related to the international rating agencies’ assessments. Prosecutors said earlier this year that they were investigating the possibility that “false, unfounded or imprudent judgements” had unduly affected markets.
Deven Sharma, S&P’s president from 2007 to 2011, was one of seven senior figures linked to the agencies who should be sent to trial, according to the prosecutors.
In January investigators searched S&P’s Milan offices two days after the agency downgraded Italy along with eight other countries including France and Spain.
Five days later, Trani prosecutors ordered a search of the Milan offices of Fitch, the world’s second-largest ratings agency, which downgraded Italy three days later.
The agencies deny any wrongdoing.
Standard & Poor’s called the Trani prosecutors’ accusations “totally unfounded” and added that the agency will continue to work “without fear”.
Prosecutors said they would not be taking action against Moody’s managers after opening a probe into its decisions.
On the same day, the chief prosecutor in the investigation announced that Lazio’s Audit Court had opened a parallel investigation into the two international rating agencies.
Investigators there have estimated damages to the Italian Treasury at 120 billion euros, Trani prosecutor Carlo Maria Capristo said.
Prosecutors there have requested indictments for top management at Standard & Poor’s and Fitch agencies, he said. Capristo added that S&P is also under investigation in the US, where the justice department has officially asked Trani prosecutors to share information related to the case. “They have our full collaboration,” said Capristo.
The same office has been carrying out probes into the ratings agencies since last year, responding to complaints from Italian consumer associations Adusbef and Federconsumatori.
“Adusbef and Federconsumatori recall the damages caused by the three ratings-agency sisters,” said the groups in a July statement.
Its report also calculated damages to the Italian economy of 120 billion euros due to downgrades amid the euro crisis. (source)
In reaction to this today Fitch announced a restriction in activities in Italy: ”Effective immediately – and in the absence of clarity around why Trani opposes analysts sharing legitimate opinions with the market in a transparent and appropriate manner – Fitch has restricted its market communication regarding the ratings of Italian entities and issuances to formal published research,” said Fitch. “All teleconferences, conferences in Italy and any similar events for the purpose of discussing Italian entities are suspended, and questions from third-party market participants such as investors or journalists will be referred back to our published comments”.
Standard & Poor’s has called the Trani prosecutors’ accusations “totally unfounded”.