Prosecutors in Italy have launched a probe into the working methods of Moody’s rating agency, accusing the company of spreading false figures and manipulating the market, Press TV reports.
The investigation was headed by public prosecutor Michele Ruggiero who had also demanded the prosecution of another ratings agency, Standard & Poor’s, at the end of May.
Standard & Poor’s, however, rejected all accusations, specifying in a statement that there was no evidence to support the allegations against the company.
Enquiries into Moody's methods were instigated by a formal complaint lodged by the Italian consumer association, Adusbef and Federconsumatori, who claimed that the rating agency had deliberately manipulated its figures in order to undermine the Italian financial market.
“We became aware of something not quite right in 2007. Moody’s used to release its figures once or twice a year but all of a sudden ratings were being announced continuously. It became clear to us that Moody’s and its sisters Standard & Poor’s and Fitch were taking advantage of their influence on the market. A perfect example is Moody’s triple-A rating for Lehman & Brothers only months before the mortgage company collapsed,” Francesco Avallone with the Federconsumatori told Press TV.
According to Adusbef and Federconsumatori, the three rating agencies, which are investor-driven companies, manipulate the financial markets to benefit their investors, and thus create a conflict of interest.
“The world's biggest fund management companies are among the rating agencies' shareholders. Warren Buffet's Berkshire Hathaway, Fidelity, State Street, Blackrock and Morgan Stanley Investment are just a few of Moody's shareholders. Moody's is being used by its shareholders to influence the market so to increase their share value and profits,” Avallone added.
The Italian court of accounts has estimated that the three agencies caused damages of over 120 billion euros to Italy's economy from May to November 2011.
Moody’s has not yet released any official statement regarding the accusations.
Source with video: Press TV, 26 July 2012