The Corner

Shooting the Messenger

Via Reuters:

MILAN, Aug 4 (Reuters) – Italian prosecutors have seized documents at the offices of rating agencies Moody’s and Standard & Poor’s in a probe over suspected “anomalous” fluctuations in Italian share prices, a prosecutor said on Thursday. The measure is aimed at “verifying whether these agencies respect regulations as they carry out their work,” Carlo Maria Capistro, who heads the prosecutors’ office in the southern town of Trani which is leading the probe, told Reuters. The documents were seized at the Milan offices of the two agencies on Wednesday, he said, adding that prosecutors had also asked Italian market regulator Consob to provide documents relating to their registration in Italy.

S&P in Italy said in a statement it believed the probe was “groundless…We strongly defend our work, our reputation and that of our analysts…”

Moody’s said it “takes its responsibilities surrounding the dissemination of market sensitive information very seriously and is cooperating with the authorities.”

The Trani prosecutors have opened two probes — one for each rating agency — after a complaint by two consumer groups over the impact of their reports about Italy on Milan stock prices. The first complaint was filed against Moody’s after it published a report in May 2010 about the risk of contagion for Italian banks from the Greek crisis. A second complaint filed in May this year targeted Standard & Poor’s after it threatened to downgrade Italy’s credit rating because of its huge public debt. The prosecutors are also investigating whether any crimes were committed during a sell-off in Italian assets on July 8 and July 11 as fears spread that the euro zone’s third largest economy is being sucked into the widening debt crisis.

One of the consumer groups behind the complaints said the probe was aimed at finding out whether the market’s sharp drop was due to a “precise scheme by hedge funds and other unidentified players that could be linked to the negative comments about Italian public finances by the rating agencies.”

There’s always a conspiracy theory.

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