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S&P and Fitch: "accused of manipulation" ~ Italian prosecutors have filed charges

Posted by on in Consumers Fight Back
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The Italian Job:~ S&P and Fitch accused of market manipulation in Italy --

 
Commenter's avatar

allseemsfine commented:

11/12/2012:-

 

"Amazed you lot are defending the companies that helped pack-out your pension pots with junk. 
Finally a country has had enough of paying inflated bond rates, manipulated in unison by the ratings agencies. It was so obvious, in a few years this manipulation by the rating agencies will be in A level text books, you lot should get out more."

--Italian prosecutors have filed chargesagainst Deven Sharma, the former president of Standard & Poor’s, and six other credit rating officials for issuing downgrades that destablised the country and fuelled the debt crisis. Prosecutor Michele Ruggierohas asked a court in Trani, Italy to indict five S&P employees and two from Fitch Ratings for market manipulation, in a move that could trigger a raft of similar claims against rating setters around the world, and --accused them of;“aggravated and continuous…market abuse", ..they leaked“biased and distorted information”about Italy’s financial stability to traders",.. the rating agencies had tried 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”.

S&P and Fitch accused of market manipulation in Italy

Italian prosecutors have filed charges against Deven Sharma, the former president of Standard & Poor’s, and six other credit rating officials for issuing downgrades that destablised the country and fuelled the debt crisis.

A closeup taken on December 31, 2011 in Lille, shows triple
Italian prosecutors claim downgrades from S&P and Fitch destablised Italy and exacerbated the eurozone debt crisis Photo: AFP
 

Prosecutor Michele Ruggiero has asked a court in Trani, Italy to indict five S&P employees and two from Fitch Ratings for market manipulation, in a move that could trigger a raft of similar claims against rating setters around the world.

Mr Ruggiero, who has pursued the agencies since they placed Italy on negative watch last summer, accused them of “aggravated and continuous…market abuse”. He claimed they leaked “biased and distorted information” about Italy’s financial stability to traders.

In a statement, he said the rating agencies had tried 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”.

As well as Mr Sharma, president of S&P from 2007 and 2011, the operational director for Fitch, David Riley, was also named in the legal filings.

Claims against Moody’s Investor Services were dropped. Fitch failed to return calls for comment.

In a statement, S&P said: “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, which we apply consistently around the world.

The agency added: “We will continue to perform our role without fear or favour of any investor, debt issuer or other external party and to defend our actions, our reputation and that of our people”.

Italy’s sovereign debt, which stands at 120pc of GDP and is the second highest in the eurozone after Greece, has been a focus for traders and investors for months. After warning about its concerns in May 2011, S&P downgraded Italy’s sovereign debt in September 2011 by one notch to a single-A rating. Another downgrade followed in January of this year, by two notches to BBB-. Fitch followed in February by downgrading Italy from A+ to A-.

Mr Ruggiero’s case was triggered after two consumer rights groups claimed the downgrades had been leaked to traders before being announced and had triggered big losses on the stockmarket in Milan.

If the Trani judge gives the go-ahead, it could be a test-case for dozens of other efforts to sue the credit rating agencies. Despite widespread criticism for failing to realise the debt they were rating as AAA was highly toxic, the agencies have so far managed to protect themselves from prosecution by claiming that their ratings are only opinions. In America, they have claimed protection under free speech rules.

More than 60 cases against the agencies are thought to have been filed around the world following the financial crisis but none with much success.

A breakthrough came three weeks ago when an Australian court ruled that S&P misled 12 councils in Australia by awarded a AAA rating to derivatives products created by ABN Amro which imploded less than two years after they were sold.

In July, McGraw-Hill, the American owners of S&P, admitted in a filing that US regulators, including the Securities & Exchange Commission and the Department of Justice, are investigating S&P’s ratings of structured products.

http://www.telegraph.co.uk/finance/financialcrisis/9672943/SandP-and-Fitch-accused-of-market-manipulation-in-Italy.html

  • Commenter's avatar
     

    Those of you who have not done business in Italy or lived there, vs just visiting as a tourist, cannot even imagine how corrupt & convoluted the government is there. Just one little true story to illustrate: I was a marketing manager for a fortune 5 enterprise software company, went to Rome to give a briefing to a collection of Italian government IT department heads. I got to the slides which explained how our software, among many other benefits, could greatly increase productivity, resulting in great cost savings through reduced staffing due to replacement of obsolete inefficient manual & primitive computerized systems. Suddenly a brawl broke out among the attendees, a real physical engagement, including throwing objects & punches, chairs (the heavy conference type) thrown around, etc, not just shouted words. Can you guess what triggered the violence ? I will tell you: the government employee labor union boss was there and was OUTRAGED that the IT managers would consider buying any technology that would reduce the employee headcount, regardless of cost savings. I suggested that the labor union boss just unionize the computer systems :-) He did not appreciate my humor. This is JUST ONE annecdote ... there are zillions more real world true stories like this. And Greece is 10 times worse than Italy ! Don't worry, with comrade obama in the White House, America will soon catch up to our much more sophisticated and developed socialist European comrades so we Americans need not feel inferior anymore.

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  • Commenter's avatar
     

    The Italians sued Galileo because he said that the Earth orbits the sun.
    They also sued the geologists because they can't predict earthquakes (no one ever could).
    Now for crowning glory they are suing the rating agencies.

    At least they are consistently stupid. 

    The rating agencies give their OPINION, the buyer beware rule applies, as well as thousands of lines of expertly drafted T&C they make every user sign.
    The Italian courts may find them guilty, but only in Italian courts. 
    The agencies were (and perhaps still are) greedy pigs, but there were thousands of attempts to sue them in the USA - all failed, because of their fantastically tight T&C's.

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  • Commenter's avatar

    bonkthebonk

    11/12/2012 02:39 PM

     

    Ironic that rating agencies are being sued now for finally doing their job correctly rather than retrospectively for doing it so ineptly and doubtless corruptly during the boom.

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  • Commenter's avatar
     

    The rating agencies need to be sued into oblivion. The UK, the worst indebted country in the G20, has three AAAs by these corrupt agencies. Why? Because the UK is going down the tubes and it is in America's interests that they keep the UK afloat as long as possible.  We know that the City of London is corrupt, so be it the US agencies too. Not only did the UK/US cause the financial chaos they mean to chaos where they can. 

    OMG you are a fool!

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  • Commenter's avatar
     

    "The rating agencies need to be sued into oblivion. The UK, the worst indebted country in the G20, has three AAAs by these corrupt agencies."
    An inconvenient TRUTH

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  • Commenter's avatar
     

    Sit down and shut up mate, you're talking total crap

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  • Commenter's avatar
     

    The deal must have been, downgrade the Euro area, keep the UK/US AAA and you'll not go to prison for all the mortgage fraud.

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  • Commenter's avatar

    Cyclopean_Tyrant

    11/12/2012 02:27 PM

     

    So it had nothing to do with our Southern European brethren sitting on their arses and doing nothing for 10 years, whilst the North Europeans pay for them to sit in the sun.

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  • Commenter's avatar
     

    that does not explain how UK has MUCH bigger debt than Portugal. and yet has currency manipulation to overcome this,. We dont!
    So easy to give moral lessons based on this...

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  • Commenter's avatar

    expatscot1

    11/12/2012 02:18 PM

     

    I do love our european friends be it the EU Commission, the Governments of the Eurozone especially and their populations. Muppets all.  Blame the rating agencies. Blame the Uk. Blame the US. Europe is fine no problems. The world would be great if everybody stopped pointing out the obvious: the Eurozone is bust and the EU living on borrowed time and money. 

    I do wonder if these people really believe what they say or are just mouthing the propaganda from the EU.

    Muppets. Time for the UK to leave the EU to it. 

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  • Commenter's avatar
     

     And the Americans never landed on the moon.

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  • Commenter's avatar

    Catherine Carr

    11/12/2012 01:37 PM

     

    O M G....... what are these people on.... first they Jail a scientist for not being alarmist enough and predicting Armageddon when its almost impossible to predict an earthquake.... 

    Now they are after the ratings agencies for predicting the bleeding obvious about their economy.... These employees at S&P Moodys and Fitch need to watch out because these idiots are likely to issue a European Arrest Warrant and it will be 5 years or so in the clink.... 

    On a serious note how the hell did we ever sign up to this EAW when as we all knew this sort of rubbish goes on in these places... did you know that all of these countries can arrest someone and keep them incarcerated for weeks or months whilst they have a look at the matter...

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  • Commenter's avatar
     

    Perhaps you should read the article again - there is also an accusation of insider trading. Given the issues with LIBOR its perhaps not so far fetched.
    What about the sub-prime ratings by these same agencies, have you forgotten or do you choose not to remember?

    Hats off the Italy. Someone needs to be held accountable at some point.... This is a start!  

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  • Commenter's avatar

    uphillstruggle

    Yesterday 02:38 AM

     

    doh! go do some reasearch before rattling off a load of populist rhetoric.

     

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  • Commenter's avatar
     

    Rather post a critic point by point - then perhaps we can discuss. 
    Are you implying that LIBOR has not been manipulated? What exactly is your point - sterile generalised statements, are well..... just that 

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  • Commenter's avatar

    Catherine Carr

    11/12/2012 02:34 PM

     

    So I read the article again and dont see anything in it other than the Italians trying to blame someone else for their troubles... 

    As to the insider trading charge well that is just rubbish... If the traders got the information it is because the institutions who pay the agencies were paying for their reports got the reports before the pubic...

    The people who need to be held accountable are the idiots who borrowed so much money because they believed in infinite growth... It is not the banks who lent it but the idiots who borrowed it.

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  • Commenter's avatar

    EquityKing

    11/12/2012 07:31 PM

     

    They figuratively burn their own country to the ground , then blame the referee for interference

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  • Commenter's avatar
     

    new depths in idiocy plumbed. The banks are run by people with her outlook which is why they don't understand morality or even finance for that matter given that they managed to bankrupt or nearly bankrupt themselves and run cap in hand to the government or to the arabs.

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  • Commenter's avatar
     

    Do you have any idea what you have been reading in this article? 

    The accusation was the information was leaked prior to being released. This is a valid point and needs to be investigated and then the courts can decide on guilt or innocence - thats the way the system functions. You seem to have passed judgement without knowledge of the complete facts. Interesting!

    Try this for a mind exercise: sub-prime AAA ratings, financial system collapse, + 30 Mil loose employment world wide, government bailout of banking institutions and then austerity. See a pattern here?   

    And yes, some countries have borrowed more than they should have, no argument there. But also consider FIAT currency - the banks managed to destroy themselves even with free money. In the end, just greed & more greed... The financial system is not functioning in any reasonable manner and needs to be reviewed urgently and appropriate systems put in place in order that the banking system functions to aid society - you know, that old social contract issue - and not serve as clearing houses for bonuses by means of trading between themselves.

    (Edited by author 1 day ago)

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  • Commenter's avatar

    uphillstruggle

    Yesterday 02:41 AM

     

    Right, so you want the Italian courts to decide on case brought by the Italian state against a US ratings agency.  And, furthermore, in the new fascist state that is Europe.

    If I were the agency I would say vaffanculo and tell them to stick their charges up their arse.

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  • Commenter's avatar

    Catherine Carr

    11/12/2012 03:12 PM

     

    Oh dear.... I guess you dont know how ratings agencies make their money.... people pay them for their reports.... and funnily enough they get to see their findings first...  Its not insider trading....

    As I said its all about the Italians not liking the rating they have received due to their over borrowing...

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  • Commenter's avatar
     

    As you seem unable or unwilling to read, here is the text "claimed the downgrades had been leaked to traders". I really do have an idea how rating agencies function. However, the claim made against them is something other than normal operation. 

    But you seem to have ignored or are completely ignorant of how we got into this situation in the first place. The complete system is dysfunctional - any reasonable rational person should be able to see the obvious, why do you choose not to?

    (Edited by author 1 day ago)

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  • Commenter's avatar

    EquityKing

    11/12/2012 07:32 PM

     

    You're not the dumbest person to ever read the Telegraph ... but if that guy dies

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Comments

  • doyla66
    doyla66 Thursday, 15 November 2012

    And just how did these ratings agencies rate Bankwest when it was still trading whilst insolvent?

    I'm still waiting on that answer. I posed it a long, long time ago. Not one of those agencies that the banksters, the federal & state governments, their agencies of ASIC, etc - all used to spruik in unison how good the ratings were.
    So, who was fooling who? For Fitch, S&P, Moodys, et al were either totally manipulating the situation/market or just not doing their jobs they get paid big dollars to do. It is one or the other. But which one?

  • doyla66
    doyla66 Thursday, 15 November 2012

    Agree all pillocks indeed: Origin: mid 16th century: variant of archaic pillicock 'penis', the early sense of pillock in northern English

  • doyla66
    doyla66 Thursday, 15 November 2012

    :):D:o;) I didn't know that bit - might have to revise my english :D

  • doyla66
    doyla66 Thursday, 15 November 2012

    Good to see other countries getting the hang of "smacking" ratings agencies for their suspect and at times totally irresponsible nonsense. :D
    The sooner they get over the EU experiment and get back to doing their own thing the better. Too much long drawn out fuss over what is patently obvious: the rules for Mediterranean cultures are not going to work for German banks and vica versa. Sad but true: the Euro party is over - now for the clean up and aftermath.
    According to some schools of thought this is the end of the Age of Belief.
    The false prophets, soothsayers and classical crystal ball gazers have had their way for long enough.
    Debunking is one of our national pass times.
    Consequently Australians are quicker to see through the game and dismiss the BS without as much ado. The majority of us are far less attached to tradition, most of ours being derived from other cultures. Australia has the potential to come out of this in good shape. Why on earth our governments have spent so much time, energy and money following other countries over hill, over dale, into the abyss and out again is beyond me. Must be a glitch in the national psyche: the need to feel accepted globally by under performing?

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