Rating agencies under fire for conflicts in valuation process

Moody's and S&P methodology flaws could undermine banks' risk management activities

Inconsistencies in the way rating agencies rate different securities could cause problems for banks calculating their risk capital requirements, according to research from Nomura published in June.

Mark Adelson, head of structured finance research at Nomura in New York, says that certain aspects of Standard & Poor's and Moody's valuation procedures may undermine rating consistency and comparability. "Risk management activities will become more complicated and credit derivative trading activities