Weiss Group LLC, an independent research provider, bought back a financial-institutions rating business it previously sold and intends to apply for the unit to become a "nationally recognized statistical ratings organization," or NRSRO, the group’s chairman said.
The unit, Weiss Ratings, produces "financial-safety ratings" for hundreds of U.S. banks and insurance companies and doesn’t accept compensation from the companies it rates. The business was purchased from TheStreet.com, which had acquired it from Jupiter, Fla.-based Weiss Group in 2006. Financial terms of the deal weren’t disclosed.
Martin Weiss, the chairman of Weiss Group who founded the firm’s research and ratings business in 1971, said proposed changes for the credit-ratings industry following the financial crisis have "skirted around the business model" of major rating firms, whose ratings continue to be paid for by companies and debt issuers. Critics of the raters have said that the raters’ conflicts of interest played a role in inflated ratings they assigned to subprime-mortgage debt, which later helped exacerbate the crisis.
"I believe the whole system around NRSROs needs to be reformed—that’s a factor that motivated me to return to the ratings business," Mr. Weiss said. He added that he wants "to demonstrate that alternatives to the popular business model are possible and better for investors."
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