Moody’s (MCO) continues to get clobbered for the apparent “computer glitch” that led to $4 billion of Euro junk getting rated Triple-A. Connecticut Attorney General Richard Blumenthal has launched a fraud investigation. New York Senator Chuck Schumer, meanwhile, is howling into every TV camera he can find. Bloomberg:
“We have been aware of allegations that, in effect, there was a cover-up of these ratings inaccuracies and defects in the models applied to these complex structured securities,” Blumenthal said in an interview yesterday. “The question is whether the defects were purposeful” and whether Moody’s subsequently sought to hide the errors, he said.
Moody’s, which is 19.6 per cent owned by Warren Buffett’s Berkshire Hathaway Inc., fell $6.99, or 16 per cent, to $36.91 in composite trading on the New York Stock Exchange yesterday, valuing the company at about $9 billion. It’s the biggest decline since Aug. 20, 1999.