The Courage to Innovate
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The Courage to Innovate. Rating Agencies, Indexes and Your Portfolio. Your portfolio is built on stale and unreliable credit ratings Even your S&P 500 index fund S&P and Moody ’ s use issuer pay business model. What We Hear. “ I hate S&P! Those guys are crooks!

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The Courage to Innovate

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The Courage to Innovate


Rating Agencies, Indexes and Your Portfolio

Your portfolio is built on stale and unreliable credit ratings

Even your S&P 500 index fund

S&P and Moody’s use issuer pay business model


What We Hear

“I hate S&P!

Those guys are crooks!

Have you read ‘The Big Short’?”

-Premier Wealth Manager


Government Studies

  • Financial Crisis Inquiry Commission

  • Senate Permanent Committee on Investigations: Credit Ratings

  • SEC Credit Ratings Firms Summary Report - 2008


Academic and Industry Studies

  • CFA Institute

  • “Issuer Pays Ratings Model and Ratings Inflation

  • “Does the Bond Market Want Informative Credit Ratings?”

  • “Does Regulatory Certification Affect Information Content of Credit Ratings?”

  • “Credit Rating Firms Have Historically Been Harder on Sovereign Debt Than Corporate Debt”


Lehman Brothers - 2008

Lehman Files for Bankruptcy

September 14th 2008


Lehman Brothers - 2008

AAA

AA+

AA

AA-

A+

A

BBB+

BBB

BBB-

BB+

BB

BB-

B+

B

B-

CCC+

CCC

CCC-

CC

C

D

5/28/08

9/23/08


Credit Rating Age Indexes


Number of Companies in Average


Questions?


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