Meredith Whitney's promised ratings agency won't save investors from the opinions of Standard & Poor's -- at least not anytime soon.
Almost a year after Whitney pledged to build a debt-rating operation to rival the biggest in the business, she has yet to file for federal certification to do just that, according to the Securities and Exchange Commission.
Calls and e-mails to Meredith Whitney Advisory Group LLC were not returned this week and last. Whitney also did not return calls or e-mails in the fall after she announced her plans. Whitney told CNBC last week that news about her credit-ratings business should be "out shortly."
The closest Whitney has come to federal approval was a Nov. 10 meeting with SEC Chairman Mary Schapiro to discuss her ambitions. According to a 12-page document filed at the time, Whitney intended to hire up to 650 people over a three-year period and pay analysts about $225,000 each -- slightly more than would-be competitors.
The document stated that incumbent rating agencies were "ineffective" and had "little to no credibility." S&P was heavily criticized by the Obama administration after it downgraded U.S. debt on Aug. 5 to AA+ from AAA. The SEC is scrutinizing S&P's methodology and whether the downgrade was leaked prior to the official announcement.
Whitney told Fortune Magazine last February that she had a team of analysts rating debt using a much more transparent and rigorous process than the big three ratings agencies. She declined to say how many of her employees were assigned to debt ratings or if they were separate employees than those analyzing equities, the calling card to date of Meredith Whitney Advisory Group, the research firm Whitney founded in 2009 after making a prescient bearish call on troubled banks in advance of the credit crisis.
Though Whitney's plan to start a debt rating agency made headlines, her firm has not filed with the SEC to become a Nationally Recognized Statistical Ratings Organization, a status that is imperative for organizations that want to advise institutional investors such as pension funds, which follow strict rules about the riskiness of the debt they purchase.
There are currently 10 NRSROs registered with the U.S. government, the newest being Realpoint LLC, which won approval in June 2008. The SEC has no applications pending.
S&P offers the most comprehensive range of work, with 1.23 million ratings on different entities and forms of debt, according to a January report from the SEC. Moody's has 1.08 million ratings and Fitch circulates some 511,735 grades. Each of the three companies had between 1,200 and 1,400 credit analysts and supervisors on staff.
Winning government approval to rate debt requires a track record. According to federal laws, at least 10 large institutional investors have to pledge that they have relied on an organization's credit analysis for at least three years. Whitney may be waiting to file until she has that body of references.
Regulators have "exemptive authority," according to an SEC spokesman, that would allow them to waive that requirement.
Write to Kyle Stock at Kyle.Stock@dowjones.com