Ackman Brings The Hammer Down On Ratings Agencies

Sep 17 2009 | 2:04am ET

Activist hedge fund honcho William Ackman is joining the piling-on of credit ratings agencies in the wake of a potentially devastating court decision.

The Pershing Square Capital Management chief said that much of the blame for the credit crisis can be laid at the feet of the ratings agencies, and recommended that any overhaul of the financial system make stricter regulation of them a top priority.

Ackman went even further, saying ratings agencies should have their feet held to the fire for their role in building up the credit bubble. The hedge fund manager said they should face more liability for their ratings, a reality that for the agencies that may be coming sooner rather than later. Earlier this month, a federal judge ruled that ratings agencies do not enjoy the absolute protection of the First Amendment for ratings with limited distribution, in a case sparked by the failure of a structured investment vehicle set up by hedge fund Cheyne Capital.

“They won’t be as profitable, but they’ll be a lot more careful,” Ackman predicted at a conference in Washington, D.C.

Always the optimist, Ackman said there was a silver lining to the failure of the ratings agencies.

“The best thing of all this is that the triple-A is meaningless, and I think it will cause people to do their homework,” he said. Many of the subprime mortgage-backed securities that precipitated the credit crisis enjoyed the highest ratings from the three dominant ratings agencies, Fitch Ratings, Moody’s Investor Services and Standard & Poor’s.


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.