Morgan Stanley Got S&P to Inflate Ratings, Investors Say - Bloomberg

Morgan Stanley Got S&P to Inflate Ratings, Investors Say - Bloomberg

Morgan Stanley successfully pressured New York-based S&P to raise its rating on some of the Cheyne securities, according to the plaintiffs. After Lapo Guadagnuolo, an S&P employee, told Morgan Stanley that some of the securities would get BBB ratings instead of the desired A grade, a banker e-mailed his boss and said the ratings were “very inappropriate.” S&P then agreed to give the higher rating, according to the court filing.
Morgan Stanley earned fees totaling as much as $30 million when the Cheyne notes were issued, according to the documents.
‘Rate Everything’
“All of us were under instructions to rate everything that we could bring in the door, and they were measuring market share on a monthly basis,” Frank Raiter, a former analyst of residential-mortgage bonds at S&P, said in a deposition, according to the documents. “I wasn’t real confident we were doing a very good job at it.”