Standard & Poor’s (S&P) said its president is stepping down, capping two weeks of controversy following the rating agency’s downgrade of US government debt on August 5 that sparked a row with the Treasury.
S&P’s parent McGraw-Hill Companies Inc said Deven Sharma, who has served as S&P president since 2007, will be succeeded on September 12 by Citibank COO Douglas Peterson.
“S&P will continue to produce ratings that are comparable, forward looking and transparent,” McGraw-Hill said, adding that Sharma would work on a strategic portfolio review for the group until leaving at year-end.
The one-notch downgrade of US government debt from AAA, which has not been matched by other major rating agencies, led to the biggest sell-off in global stock markets in three years and was criticised by Treasury officials and the administration of President Barack Obama over some of the methodology used by S&P.
The US Justice Department is also investigating the ratings agency over its actions in assigning high ratings to complex mortgage securities leading up to the 2008-2009 financial crisis, a source familiar with the matter said last week. S&P management has been criticised for its handling of the downgrade, although some advocates said it was acting responsibly in the light of mounting debt and Washington’s political inability to devise a long-term solution to the issue.
The Financial Times, which first reported Sharma’s resignation, quoted unnamed sources on Tuesday saying his departure was unrelated to the downgrade or the Justice Department investigation. Executives and directors of McGraw-Hill are under increasing pressure from shareholders to restructure the publishing company and possibly spin off the profitable S&P ratings business.
Outgoing president Sharma joined McGraw-Hill in 2002 from consulting firm Booz Allen Hamilton, according to a statement from the publishing company. He served as a vice-president for global strategy for five years before joining S&P in 2006 as executive vice-president for investment services and global sales. He was named president in 2007.