Rapid Ratings International

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Rapid Ratings International
Rapid Ratings Logo.jpg
Founded 2007
Headquarters New York, NY
Key People James Gellert, Patrick Caragata
Products Financial Health Ratings
Website http://www.rapidratings.com/

Rapid Ratings International, a financial services company that uses a proprietary quantitative system to rate the financial health of corporations and financial institutions. The company’s user-based compensation model offers an alternative to the “company pays” model used by NRSROs such as Standard & Poor’s, Moody's and Fitch Ratings.[1]

History

The framework for Rapid Ratings' financial health ratings system ("FHR") was developed in 1991 by Dr. Patrick Caragata. The system uses 62 financial ratios, with industry-specific risk weightings in six areas of corporate activity:

  • Debt service management,
  • Leverage,
  • Working capital efficiency,
  • Sales,
  • Cost structure, and
  • Overall profitability.

The ratings are expressed on a scale of zero to 100, and are recalculated whenever new financial data are released.

In 2007, Rapid Ratings was brought to the U.S. by James Gellert and Douglas Cameron.

Rapid Ratings rose in prominence in the wake of the 2008 financial crisis, as traditional rating agencies were criticized for inherent conflicts of interest in the issuance of ratings, since the firm being rated typically pays the NRSRO for the rating. In contrast, ratings issued by Rapid Ratings' FHRs are paid for by users of its services.

In February 2012, Gellert testified before the House Financial Services Subcommittee on Oversight and Investigations on its investigation into the bankruptcy of MF Global. In the testimony, it was revealed that, while S&P and Fitch had investment-grade ratings on MF Global until the day of its bankruptcy, Oct. 31, 2011, Rapid Ratings had assigned the company a high-risk FHR two years prior to the bankruptcy.[2]

James Gellert John Lothian News Interviews

Ratings: How Does Your Broker Rate?
If you knew the financial health of your futures broker, would that help you decide which firm to work with? James Gellert, President and CEO of Rapid Ratings, says futures broker ratings could make for more informed retail and professional investors. Gellert explains how ratings of public brokers and voluntary ratings of private brokers would provide transparency for the FCM community and its customers. Rapid Ratings uses dozens of financial ratios, based on audited financial reports, to provide a score for each firm.

In this video, a simple animation and interview with Gellert help explain broker ratings. Published Dec. 17, 2012.[3]


James Gellert of Rapid Ratings International Discusses MF Global & Credit Ratings Regulation
James Gellert is Chairman and CEO of Rapid Ratings International, a financial services company that uses a proprietary quantitative system to rate the financial health of corporations and financial institutions. The company’s user-based compensation model offers an alternative to the “company pays” model used by NRSROs such as Standard & Poor’s, Moody’s Investors Service and Fitch Ratings. Gellert spoke with John Lothian News Editor-at-Large Doug Ashburn about Rapid Ratings’ “user-pays” model, its early warning on MF Global, and credit ratings regulation under Dodd-Frank. Published June 20, 2012. [4]

Key People

References

  1. About Rapid Ratings. Rapid Ratings.
  2. Innovation of the Year: Rapid Ratings. Risk.net.
  3. Ratings: How Does Your Broker Rate?. John Lothian News.
  4. James Gellert of Rapid Ratings International Discusses MF Global & Credit Ratings Regulation. John Lothian News.