A Bailout Nation reader reached out to me with the following tale. What makes it so compelling even today was what they thought they could do with it: Turn it into another Pay-for-Play business:
I was at Morningstar as a mutual fund analyst when S&P tried to buy the company circa 1997.
The S&P people insisted to Joe Mansueto (Founder/Chairman) that he was leaving big mounds of money on the table by not charging mutual funds for their ‘star’ ratings.
Joe replied to the S&P bidders that it was an obvious conflict of interest to charge the funds for their own ratings — how would Morningstar maintain its independence?
They called him naive — and stopped the merger talks.
I was a mid-level manager at Morningstar at the time; I heard the above from an exec who was told it by the CEO. I wasn’t in the meetings or anything, but I have no reason to doubt that that’s what went down . . .
I have no first hand knowledge of this, but knowing what I do of the parties involved, and having confidence in this source of info, the anecdote rings rather true to me.
Consider how typical that “Pay for Play” as a model was amongst the Ratings Agencies. To me, it is very consistent with the thought process and attitudes that were pervasive among the rating agencies circa 1990s/early 2000s.
NOTE: In 2007, Morningstar Research announced that it had acquired Standard & Poor’s fund data business.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.