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24 Law & Pol'y Int'l Bus. 783 (1992-1993)
The International Rating Game: An Analysis of the Liability of Rating Agencies in Europe, England, and the United States

handle is hein.journals/geojintl24 and id is 795 raw text is: THE INTERNATIONAL RATING GAME: AN ANALYSIS OF THE LIABILITY OF RATING AGENCIES IN EUROPE, ENGLAND, AND THE UNITED STATES CARSTEN THOMAS EBENROTH* THOMAS J. DILLON, JR.** In the analytical experience, we are constantly reminded that the past is less and less prologue to the future. Standard & Poor's in the forward to its CORPORATE FINANCE CRITERIA I. INTRODUCTION In the business of debt and securities rating, the reliability of the agency rating is all important. Of the numerous rating agencies which exist,1 only a hallowed few have a reputation for virtually unabridged reliability. But even these agencies make mistakes.' The largest of these have begun to branch out into the international financial markets as the companies they rate explore an increasingly global economy. Coupled with the interna- tional expansion of rating agencies and a growing potential for mistakes in foreign venues come disparate classes of liability in different jurisdictions. The globalization of national economies and the resulting development of international financial rating services is, in part, brought about by ever- increasing economic and political activity within the recently completed European Economic Area and border-free European Community,' as well * Director of the Center on International Economics and Professor of Law, University of Con- stance, Germany. Referendar (J.D.) 1967; M.B.A. 1968; Doktor der Wirtschaftswissenschaften (Dr. rer. pol.) 1969; Doktor der Rechte (S.J.D.) 1971; Privatdozent 1974; Free University of Berlin School of Law. ** Of the Georgia Bar and Member of the Center on International Economics, University of Constance, Germany. 1. There are approximately 36 rating agencies worldwide. Those countries and territories that host at least one domestic rating agency are Australia, Canada, Chile, Cyprus, England, France, Germany, Hong Kong, India, Japan, South Korea, the Philippines, Portugal, and the United States. 2. See, e.g., Mallinckrodt Chemical Works v. Goldman, Sachs & Co., 420 F. Supp. 231 (S.D.N.Y. 1976). 3. The European Economic Area, or EEA, is the result of an agreement between the twelve European Community member states and six prospective members-Austria, Finland, Liechtenstein, Norway, Sweden, and Switzerland-which allows the aforementioned nations to participate in the

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