THE PRESIDENT OF the ratings agency Standard & Poor’s is to resign his post within a month, after coming under major international pressure for his firm’s decision to strip the United States of its triple-A credit rating.
A statement from S&P’s parent company McGraw-Hill, published earlier today, announced that its current president Deven Sharma, 55, would be taking up a new assignment “working on the company’s strategic portfolio review until the end of the year”, after which he would be leaving.
The announcement comes less than three weeks after his ratings agency – which ranks Ireland only one notch above the ‘junk’ threshold – decided to downgrade its rating of the US government, for the first time in that government’s history.
The decision was criticised by many investors and commentators around the world, with large numbers criticising S&P for overlooking the US’s ability to print enough cash to clear its debts.
The downgrade had come less than a week after US legislators reached a deal to avert an unprecedented debt default.
Sharma’s departure also comes as S&P faces investigation from the US’s markets watchdog, the Securities and Exchange Commission, over allegations of insider trading within the agency in advance of the downgrade.
It is alleged that some staff with advance knowledge of the August 5 downgrade leaked the news to others who were able to then exploit this knowledge through their own market trading.
A Wall Street strategist told Bloomberg that Sharma seemed to have been “helped out the door” of S&P, remarking that a planned retirement would have been “handled in a different way”.