Tuesday, June 3, 2008
The three major credit ratings firms -- Moody's, Standard & Poor, and Fitch -- are expected to announce that they will revise their fees structure to settle an investigation by the New York State Attorney General. Under current practice, only a firm selected to issue a rating by the investment bank gets paid, even though other firms may have reviewed the deal. Under the settlement, ratings firms would charge two separate fees, one for the preliminary work and one for the rating. The expectation is that this would reduce the conflict of interest between the rating firm and the investment bank. The SEC is expected soon to issue proposed rules to help restore investor confidence in ratings. WSJ, Ratings Firms to Shift Fee Practices.