An Indian Ratings Firm’s CEO Placed on Leave After Anonymous Complaint
Rajesh Mokashi was sent on leave pending a probe into an anonymous complaint received by SEBI.
(Bloomberg) -- Care Ratings Ltd. has put its chief on leave pending a probe into an anonymous complaint received by the nation’s markets regulator, adding to the troubles for India’s credit assessment industry.
India’s credit rating companies have been facing criticism for missing warning signs at the IL&FS Group, whose surprise default last year led to a crippling liquidity crisis and soured the sentiment for the entire financial sector. The incident has since prompted the regulator Securities & Exchange Board of India to tighten rules for rating firms to restore investor faith in the system.
“Two rating firms sending their CEOs on leave shows the magnitude and scale of the recent developments,” said Amit Tandon, managing director at Institutional Investor Advisory Services. “Typically, the rating side is separated from business development. The probes need to address this and ask whether the Chinese walls were maintained.”
Care appointed Executive Director for Ratings T.N. Arun Kumar as interim chief executive officer. Kumar won’t be part of the rating operations to ensure the independence of the ratings process, according to the filing.
The share price of the ratings assessor fell 3.2%, the most in a month, compared to a 0.8% drop in the benchmark Sensex Index on Thursday. The Mumbai-based company didn’t immediately reply to an email seeking comments on the probe.
To contact the reporter on this story: Rahul Satija in Mumbai at rsatija1@bloomberg.net
To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Anto Antony, Ravil Shirodkar
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