Proposed conduct code for creditratings agencies draws criticism

“Fairly or not, rating agencies have been in the spotlight in the wake of recent high-profile corporate scandals,” said David Knott, chairman of the International Organisation of Securities Commissions’ (Iosco) technical committee in September 2003 when the organisation announced its statement of principles regarding the manner in which credit rating agencies’ activities are conducted.

After Enron and the slew of other equally tawdry corporate failures, regulators were concerned that credit rating agencies’ had not been able to predict or foresee these damaging blow-ups.

“Some regulators may have thought the appropriate response to those scandals was that potentially regulating the ratings agencies would make sure these problems were avoided in the future. We, and others in the market, pointed out the fact that Enron and Parmalat involved cases of fraudulent behaviour that the