The European Securities and
Markets Authority (ESMA ) has hit the European branch of S&P, an American
credit rating agency, with a fine of €1.1 million for publishing credit ratings
before the concerned securities were issued by the rated firm and announced to
the market. The fine also covers two other contraventions relating to S&P’s
internal controls and transparency obligations.
ESMA fined S&P Global Ratings Europe Limited €825,000, €210,000 and €75,000, respectively, for the contraventions. The violations negate the Credit Rating Agencies Regulation (CRA Regulation ),
the EU financial market supervisor announced on Friday, noting that the agency could appeal against the
decision before the Board of Appeal of the European Supervisory Authorities.
S&P Global Ratings is the
credit agency division of S&P Global, a New York-based publicly traded
company that specializes in financial information and analytics. The firm
covers the stocks, bond and commodities markets in its services. S&P alongside Moody’s
Investors and Fitch Ratings are considered the three largest credit rating agencies in
the world.
European Regulator Unpacks Breach Allegations
against S&P
According to ESMA, flaws in S&P’s internal controls procedures
and implementation resulted in the premature release of its credit ratings. For
instance, between June 5, 2019, and September 8, 2021, the agency published
credit ratings on six issuers before they issued their securities and announced
the same to the market, the regulator said it found in its investigation.
“Publishing a credit rating
before the issuance of the rated securities may result in harm to the issuer,
to investors and more generally to the orderly functioning of the financial
markets,” Verena Ross, ESMA’s Chair, noted.
On the breach relating to
S&P’s transparency obligations, the financial markets supervisor said it found six cases where the agency yanked off credit ratings from
its public portals without prior notice. These instances happened between 2019 and 2021, ESMA said.
On the third breach, ESMA noted that the agency failed to ensure that the information shared by one of its rated
entities was correct and up-to-date. This information was shared with ESMA for publication in the
European Rating Platform.
“All breaches were found to have
resulted from negligence on the part of S&P. In calculating the fine, ESMA
considered both aggravating and mitigating factors provided for in the CRA
Regulation,” ESMA explained.
The European Securities and
Markets Authority (ESMA ) has hit the European branch of S&P, an American
credit rating agency, with a fine of €1.1 million for publishing credit ratings
before the concerned securities were issued by the rated firm and announced to
the market. The fine also covers two other contraventions relating to S&P’s
internal controls and transparency obligations.
ESMA fined S&P Global Ratings Europe Limited €825,000, €210,000 and €75,000, respectively, for the contraventions. The violations negate the Credit Rating Agencies Regulation (CRA Regulation ),
the EU financial market supervisor announced on Friday, noting that the agency could appeal against the
decision before the Board of Appeal of the European Supervisory Authorities.
S&P Global Ratings is the
credit agency division of S&P Global, a New York-based publicly traded
company that specializes in financial information and analytics. The firm
covers the stocks, bond and commodities markets in its services. S&P alongside Moody’s
Investors and Fitch Ratings are considered the three largest credit rating agencies in
the world.
European Regulator Unpacks Breach Allegations
against S&P
According to ESMA, flaws in S&P’s internal controls procedures
and implementation resulted in the premature release of its credit ratings. For
instance, between June 5, 2019, and September 8, 2021, the agency published
credit ratings on six issuers before they issued their securities and announced
the same to the market, the regulator said it found in its investigation.
“Publishing a credit rating
before the issuance of the rated securities may result in harm to the issuer,
to investors and more generally to the orderly functioning of the financial
markets,” Verena Ross, ESMA’s Chair, noted.
On the breach relating to
S&P’s transparency obligations, the financial markets supervisor said it found six cases where the agency yanked off credit ratings from
its public portals without prior notice. These instances happened between 2019 and 2021, ESMA said.
On the third breach, ESMA noted that the agency failed to ensure that the information shared by one of its rated
entities was correct and up-to-date. This information was shared with ESMA for publication in the
European Rating Platform.
“All breaches were found to have
resulted from negligence on the part of S&P. In calculating the fine, ESMA
considered both aggravating and mitigating factors provided for in the CRA
Regulation,” ESMA explained.