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S&P, Fitch preliminary hearings open in Italy

Ratings agencies accused of 'destabilizing credit confidence'

03 December, 11:58
S&P, Fitch preliminary hearings open in Italy (ANSA) - Trani, December 3 - Preliminary hearings began in Italy Tuesday in a case against managers and analysts at top ratings agencies Standard & Poor's (S&P) and Fitch, accused of market tampering. The injured parties include the Bank of Italy and the economy ministry, who argue that the agencies issued allegedly unjustified downgrades, putting undue stress on the country's borrowing costs amid the euro crisis. Prosecutor Michele Ruggiero has pursued the agencies since Italy was put on negative watch last summer. Fitch and S&P attempted to "destabilise Italy's image, prestige and credit confidence on the financial markets, alter the value of Italian bonds by depreciating them (and) weaken the euro," he said in a statement last month when seeking indictments. Similar claims against ratings agency Moody's have been dropped.

Business and legal analysts believe the case could spark similar claims against ratings agencies around the world. Italian prosecutors said earlier this year that they were investigating the possibility that "false, unfounded or imprudent judgements" had unduly affected markets. Deven Sharma, S&P's president from 2007 to 2011, was one of seven senior figures linked to the agencies. In January investigators searched S&P's Milan offices two days after the agency downgraded Italy along with eight other countries including France and Spain. Five days later, Trani prosecutors ordered a search of the Milan offices of Fitch, the world's second-largest ratings agency, which downgraded Italy three days later. The agencies deny any wrongdoing. Standard & Poor's has called the accusations "totally unfounded" and added that the agency will continue to work "without fear". Prosecutors have announced that Lazio's Audit Court has opened a parallel investigation into the two international rating agencies. Investigators there have estimated damages to the Italian Treasury at 120 billion euros.