quinta-feira, 7 de abril de 2011

Economists wants investigation against Moody's, Fitch and Standard & Poor's for "crime of market manipulation"

Economists group wants an investigation in Attorney-General of the Portuguese Republic against Moody's, Fitch and Standard & Poor's by the "crime of market manipulation."  
7 April 2011

A group of economists wants an opening of an investigation against the rating agencies for the "crime of market manipulation," said the Agency's Lusa’s subscribers, José Reis. 
Moody's, Fitch and Standard and Poor's are the agencies covered by the action, which will provide input into next week in Attorney-General of the Republic. 

The document is signed by four economists: José Reis and José Manuel Pureza, from University of Coimbra, and Manuel Brandão and Maria Manuela Silva, from Instituto Superior de Economia e Gestão (ISEG).  "You need to know if the laws of competition are respected" said in statements to Lusa, José Reis that stresses that agencies "operating in the Portuguese market," the three named in the complaint, "dominate more than 90 percent of the international market".

Two of these agencies – Moody's and Standard & Poor's – have the "same owner investment fund", warns an economist, and the decisions we take, "entities that influence the rate of interest", have a significant impact on countries indebtedness, "which may affect its financial and economic stability".  In the document to be delivered on Monday at the Attorney-General of the Republic, which Lusa had access, it is said that "the higher the risk inherent in a debt issuance, the greater the return required by investors, i.e. the greater the interest" imposed by them. 

"We understand the great importance ratings made by these agencies: they serve as reference for investors, issuers and public administrators for their investment decisions and financing," says the note. Being this role has been assigned to these three agencies, "cannot allow itself to acting to change the price of interest, directing the market for situations in which they own or your customers have an interest and withdraw benefits", declares the group of economists. 

The investigation that subscribers want that document to be opened should establish the practice of abusive acts that are allocated to the three agencies, the existence of serious damage produced in the interests of the Portuguese State and people and identification of Executive Boards of these agencies and the perpetrators of acts of the complaint. 

Economists also want to know if the "benefits obtained by the agencies and their clients" were remarkable importance, apart from wanting to have access to all internal communications of the rating agencies relating to classifications for Portugal "since the year 2010”.

Read the news in portuguese here and here

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