Kroll Bond Ratings Installs Senior Management Team for MBS
A newly formed company with its sight set on shaking up the credit rating agency industry announced the appointment of the individuals who will serve on its senior management team. The team includes former executives at Fitch Ratings, Moody's Investors Service and the risk divisions of a number of large financial institutions.
Earlier this year, Jules Kroll began promoting his new venture, Kroll Bond Ratings. Kroll is considered a pioneer in the modernization of the intelligence and security sectors, and he founded the risk consultant firm Kroll. He is the current principal of K2 Global Partners.
According to a release on Wednesday, Kroll Bond Ratings will use an emphasis on intensive analysis in its ratings system, with emphasis on ratings accuracy. With the six-person management team in place, Kroll Bond Ratings said it expects to release its first ratings during Q310.
In May, Kroll said his company will begin by rating mortgage-backed securities (MBS), where he said existing credit rating agencies have suffered the most damage to their credibility.
"Investment professionals managing retirement accounts and pension funds deserve ratings in which they can have confidence to make smart investment decisions," said Kroll, the firm's CEO and chairman, in a statement.
"These professionals, with their varied and impressive expertise, have the much-needed judgment to refashion the credit ratings industry," Kroll added. "Together, we will provide investors with a reliable and accurate product."
The Kroll Bond Rating business model differs from other rating agencies. Instead of relying on the issuer paid model for running the agency — a model Kroll said has been “condemned in an outright basis” — a consortium of institutional investors will own 30% to 40% of the company, and before investing in a product, will require a Kroll bond rating. Kroll said the range of potential investors include public pension funds, corporate pension funds, endowments and universities, with each owning a small segment of the company.
Another difference with Kroll’s rating agency is that issuers will have to pay for the rating up front — a move Kroll said will cut down on so-called “rate shopping,” a practice blamed for many unworthy subprime MBS getting unwarranted triple-A ratings.
The Kroll Bond Rating team includes:
Jules Kroll, chairman and CEO. Kroll established his namesake company, Kroll, in 1972, and sold it to Marsh & McLennan Companies in 2004. His work developed the modern investigations, intelligence, and corporate security industry.
James Nadler, president and chief operating officer. Nadler was previously vice president for corporate development at General Re in the New England asset management division, where he helped create a new platform for trading, settlement and reporting. Nadler also previously was executive vice president at Fitch Ratings, responsible for leading strategy, budgets, hiring, product development, and credit rating criteria for the structured finance group.
Robert Anselmi, general counsel and chief compliance officer. Anselmi held positions with industry leaders, including New York Life Investment Management, initially as general counsel and later as vice chairman, Lehman Brothers and JPMorgan Investment Management, where he served as general counsel and managing director, respectively.
Ellen Coleman, director of underwriting review. Coleman has 20 years of financial services experience concentrated in mortgage investment and risk management and she is responsible for mortgage originator and servicer reviews.
Jerome Fons, executive vice president of strategy. Fons is an economist specializing in credit risk and rating agency issues, and spent 17 years at Moody's Investors Service, most recently as managing director, credit policy. He also previously was an economist at the Federal Reserve Bank of Cleveland.
Ajay Junnarkar, chief financial and administrative officer. Junnarkar previously was vice president and assistant treasurer at Marsh & McLennan Companies. Prior to that, he worked at Goldman Sachs, conducting due diligence investigations for its investment, merchant and private banking operations. He began his career at Kroll.
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