> slimy and dishonest
Wouldn't this rise to the level of fraudulent and thus criminal?
Wouldn't this rise to the level of fraudulent and thus criminal?
The fact that these ratings have been assumed to be a reliable proxy for risk in the market (to the point that people automate based on it) is likely the bigger issue here and the larger cause of the systemic risk of incorrect ratings.
Sure, some funds have a "go anywhere" IPS, but ratings downgrades often causes a flurry of asset sales.
If you say your holdings are 90% IG, and then after a downgrade they are only 70% IG, then you have two options: #1 - sell the downgraded assets to bring it back into compliance, or; #2, if you are within your funds stated IPS, then you have to restate the number as 70%, and have to remove all literature that references the 90% number.
IG = Investment Grade IPS = Investment Policy Statement