CFA Institute poll calls for rating reform

Investors, brokers and analysts believe the current system of rating bonds should be reformed, according to a CFA Institute Centre member poll released today. The poll conducted by the Charlottesville, Va.-based CFA Institute found that 11% of 1,956 respondents were aware of a situation in which a credit rating agency changed its rating in response to pressure from an investor, issuer or underwriter. Many respondents indicated in comments that the payment structure between CRAs and issuers presents a significant conflict of interest. More than half (55%) of 1,070 responses also agreed with the statement that credit ratings agencies should group themselves into an international standard-setting and monitoring self-regulatory body with enforcement powers. “At the very least, these results suggest that the CRAs have more than just a perception problem about their processes and integrity, which must be addressed,” James Allen, director of the CFA Institute’s capital markets policy group, said in a statement. “Clearly the respondents to this survey raise some serious concerns about the integrity of the ratings process and support for further CRA reform.”