A former Moody's Investors Service credit analyst has sued the company, alleging he was fired after his call on a bond rating was trumped by a manager's concern about how much the bond issuer was paying Moody's.
Paul Bienstock, a former vice president at the unit of Moody's Corp., said in a lawsuit in U.S. District Court in New York that he was dismissed after complaining to Moody's compliance department about his manager. The lawsuit alleges the supervisor caused an upgrade for Express Scripts Inc. to be withheld, arguing that the company "doesn't pay us."
In his complaint, Mr. Bienstock says that on Dec. 4, 2007, he presented Express Scripts debt to a Moody's committee for an upgrade from a speculative Ba1 to an investment-grade rating of Baa3, based on improved company performance. Mr. Bienstock alleges that the committee voted 5-2 for the upgrade, but his supervisor, Patrick Finnegan, the ratings committee chairman and then director of Moody's corporate-finance group, called for a revote saying "Express Scripts doesn't pay us," and "they don't visit us and they don't deserve our upgrade."
Mr. Bienstock said he protested, but the committee voted again, this time 6-1 against the upgrade. The next day, Dec. 5, 2007, Mr. Bienstock said he complained to the Moody's compliance department about a "breach" of the company's conflicts policies. The lawsuit, filed by the law firm of Sack & Sack, alleges he was fired by Mr. Finnegan on Dec. 12. Mr. Finnegan, who has since left Moody's, didn't return calls seeking comment.
So Moody's rated all the junk in the world AAA, and now it appears that Moody's thinks the whole world is now just about junk.
Makes you wonder who's paying Moody's!