S&P Establishes an Ombudsman

Standard & Poor’s said it will establish an Ombudsman to whom issuers, investors, employees and other market participants can voice gripes about potential conflicts of interest at the rating agency, business integrity and compliance processes, S&P said. The Ombudsman will report to the president of S&P but will not be part of S&P management and his or her compensation will not be tied in any way to S&P/McGraw-Hill business results, the rating agency said. This announcement takes place among a series of actions the rating agency is taking to strengthen its rating process. These actions also include hiring an external firm to conduct independent reviews of S&P Ratings’ compliance and governance processes, reducing the time that lead analysts are able to cover the same entities to five years, increase the level of employee training on compliance programs as well as increasing the amount of hours and course offerings in analyst certification training. The rating agency also said it will provide insight into non-default risks such as liquidity, volatility; valuation and recovery, better explain ratings comparability across asset classes and establish minimum portfolio disclosure criteria for structured securities servicers among other actions.