Morgan Stanley being Investigated for having S&P investors inflate ratings
Morgan Stanley (MS) successfully pushed Standard & Poor’s and Moody’s Investors Service Inc. to give unwarranted investment-grade ratings in 2006 to $23 billion worth of notes backed by subprime mortgages, investors claimed in a lawsuit, citing documents unsealed in federal court.
Executives at the ratings firms failed to warn investors about the risks associated with subprime-backed notes that were issued by a unit of London-based hedge fund Cheyne Capital Management Ltd. because they wanted to reap financial rewards from doing business with Morgan Stanley, the sixth-largest U.S. bank by assets and designer of the notes, the investors allege, citing the material made public yesterday in Manhattan.
Full article can be found on Bloomberg (http://www.bloomberg.com/news/2012-07-02/morgan-s…)
On an aside, how is it a potential crime to push the ratings agencies a certian way....but the ratings agencies themselves can't / haven't been held to account?
Plus you'd think they would lose their reputation since their whole business is built on providing unbiased ratings. It's much more acceptable to me that someone would try to bribe them rather than they actually accept it.
It is like selling a home with termites and picking your best buddy to be the home inspector for the buyer.
The rating agencies are crap. I really dont understand why they continue to stay in business. Maybe in 5 years?
The rating agencies, Moody's, S&P, and Fitch what they do is take money for banks like MS, and they give out AAA ratings to shitty securities. AAA ratings generally go to things issued from the US Treasury, then when the shit hits the fan, the rating agencies say "the ratings our opinions and should be taken with a grain of salt", and they are protected by the first amendment, the right to free speech.
It's complete bullshit; they will never be held accountable. They said the same shit in the 2007-2008 financial crisis investigation on Capital Hill.
What else is new?
MS pays an inconsequential fine and admits no wrongdoing.
End of story.
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