TheCorporateCounsel.net

July 16, 2009

Rating Agency Regulation: Lawsuits as Another Hammer?

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As noted in this WSJ article and NY Times article yesterday, the big California public pension plan – CalPERS – sued the S&P, Moody’s and Fitch rating agencies
for “wildly inaccurate and unreasonably high” ratings on structured investment
products.

While the ratings agencies face
other lawsuits for losses, the CalPERS’ complaint attacks the way in which the ratings
agencies do business.  In particular, it alleges that the agencies went beyond
being passive “raters” of structured investment products, and became an integral
part of the issuance of these products (Item 47 of the complaint, at page
11).

Even though the SEC seems likely to propose more regulation of the credit rating agencies right now – see this Directorship blog – although it already has done quite a bit over the past six months (this and this), it
may be that lawsuits like this one become an additional driver for more changes to
the rating industry. 

Gearing Up for the Fall: Financial Crisis Inquiry Commission

Yesterday, as noted in this Bloomberg article, Congress appointed the Commissioners for its Financial Crisis Inquiry Commission and the Commission is expected to start its investigations in September regarding 22 enumerated possible causes of the financial crisis (as well as the causes of the failure of major financial institutions). It’s a pretty broad dictate – so the witch hunt begins!

Here are the appointments (as excerpted from this Gibson Dunn memo):

Importantly, the Chairperson and Vice Chairperson will jointly select the
staff director and other staff of the Commission.

House and Senate Democratic Leaders also appointed the following
individuals:

House and Senate Republican Leaders also appointed the following
individuals:

How to Plan for CEO (and Other Senior Manager) Succession

We have posted the transcript for our recent webcast: “How to Plan for CEO (and Other Senior Manager) Succession.”

– Broc Romanek