S&P Rating Agency Chief Steps Down

Monday, 22 Aug 2011 10:29 PM

By Newsmax Wires

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NEW YORK — Published reports say the president of Standard & Poor's is stepping down, a decision coming only weeks after the rating agency's unprecedented move to strip the United States of its AAA credit rating.

The Financial Times and The Wall Street Journal are reporting that Deven Sharma will stay on as an adviser to S&P's parent company, McGraw-Hill Cos., until the end of the year.

The reports, citing people familiar with the matter, say Sharma's move was in the works well before S&P downgraded its rating on the U.S. to AA-plus on Aug. 5.

The downgrade sent shock waves through global financial markets and was sharply criticized by the Obama administration, which said S&P's analysis was fundamentally flawed.

Messages were left with S&P spokesmen seeking comment.

Sharma was to be replaced by a senior Citibank executive, in a move announced a few weeks after the credit rating agency downgraded U.S. government debt and sparked a row with Washington.

S&P's parent, McGraw-Hill Companies Inc , said on Tuesday Sharma would step down on Sept. 12, to be succeeded by Citibank chief operating officer Douglas Peterson.

"S&P will continue to produce ratings that are comparable, forward looking and transparent," McGraw-Hill said in a statement, adding that Sharma would work on a strategic portfolio review for the group until leaving at year-end.

The U.S. downgrade on August 5 helped lead to the biggest sell-off in share markets since the global financial crisis three years earlier and sparked a row with the U.S. Treasury Department over some of the agency's calculations in arriving at the new rating.

The U.S. Justice Department is also investigating the ratings agency over its actions on mortgages leading up to the 2008-2009 crisis, a source familiar with the matter told Reuters last week.

But the Financial Times, which first reported the news of Sharma's resignation, quoted unnamed sources on Tuesday as saying his departure was unrelated to the downgrade or the Justice Department investigation.

The board of McGraw-Hill Companies made the decision to replace Sharma at a meeting where it also discussed its ongoing strategic review on Monday, the Financial Times said.

McGraw-Hill directors and executives met on Monday with Jana Partners LLC, a hedge fund, and the Ontario Teacher's Pension Fund to hear their arguments that the company should be broken up.

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