April 30, 2010

First Report From Standard & Poor's Ombuds Raises Questions About Usage

S&P's Ombudsman, Ray J. Groves has published the first annual report summarizing the activities of his office. The report does not provide the total number of cases handled in 2009, but says that 85% were from external sources; 85% were from the U.S.; 50% concerned S&P's ratings; and only 12.5% requested anonymity.

In the report, Groves explains that the program was created in January 2009 "to address concerns about potential conflicts of interest and analytical and governance processes that are raised by clients, employees and market participants who use S&P products, services and opinions" anywhere in the world. The Ombuds promises confidentiality to inquirers who wish to remain anonymous and offers a balanced and independent approach. (S&P Office of the Ombudsman.)

The most curious aspect of the S&P Ombuds report is that it does not provide the total number of cases.  Moreover, all of the data is significant to no less than 2.5%.  In other words, it is possible that the program handled as few as 40 cases.  This would be surprising indeed.  The S&P Ombuds program was widely covered in the financial press and the company took out advertisements in the NY Times, Wall Street Journal, and Washington Post. The company itself has over 10,000 employees and serves nearly two dozen financial markets around the world. Most corporate Ombuds programs that serve internal and external constituents handled hundreds of cases annually. So, there are two questions: Why didn't the S&P Ombuds office have more cases? or, if it did, Why didn't it report the number of cases?

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