Corporate Governance

New Entrant in Credit Ratings Game

By Marie L. Oliver

Jules Kroll, founder of Kroll, Inc., is best known for pioneering the corporate intelligence business.  Kroll, Inc. specializes in ?pursuing financial crime across international borders? and has a history of tracking down assets linked to dictators.  Beyond such international exploits, the company prospered by digging up corporate dirt for Wall Street?s investment banks, brokerage houses, and law firms.

 Earlier this year, Mr. Kroll got into the credit ratings game with Kroll Bond Ratings.  Mr. Kroll argues that his experience looking under the hood of corporations gives him the necessary expertise in due diligence, promising a more forensic approach to assessing credit risk.

Two years after the financial crisis exposed the failure of the Big Three ratings firms, credit ratings remain relevant to the financial industry?money management firms, banks, and insurance companies still use them in their investment guidelines. 

However, the Dodd-Frank Act was designed to diminish the ratings? importance.  Pursuant to the Act, the SEC plans to reduce the influence of ratings by removing references to credit ratings in regulations governing securities offerings.  In addition, the industry can look forward to more government oversight, as the SEC must also create an Office of Credit Ratings to monitor the ratings agencies.

Full post as published by PomTalk on March 29, 2011 (boomark / email).