The European arm of S&P Global has been found violating multiple CRA regulations by the European Securities and Markets Authority (ESMA). Consequently, the European regulator has slammed three fines of a combined €1.1 million to the credit rating agency.
S&P is a New York-based credit ratings agency that covers a lot of speculative assets, including equities, commodities, and bonds. It is considered one of the top 3 credit rating agencies in the world, along with Moody’s and Fitch Ratings. It is a publicly listed entity in the United States with a market capitalization of $106.5 billion.
The latest move by ESMA comes after S&P was found in clear violation of CRA regulations. The major violation was the release of ratings on the securities, which weren’t even issued yet. The violations were committed from 2019 to 2021, and at least six securities were affected by them.
According to the details shared by the ESMA on its official site, the publicly listed rating agency was fined €825,000, €210,000, and €75,000 on three different violations, respectively. The regulator also mentioned that S&P would have the right to appeal before the Board of Appeal of the European Supervisory Authorities.
As per the statement from ESMA Chair Verena Ross, the release of credit ratings before the issuance of respective securities put the issuers and investors both at risk while also disrupting the orderly functioning of the financial markets.
oday’s action against S&P emphasises the importance ESMA places on CRAs complying with their obligations of timely disclosure of information regarding ratings to the market.
Verena Ross – Verena Ross
Apart from the premature release of credit ratings, ESMA also indicated flaws in its internal controls which resulted in not notifying its clients before discontinuing particular credit ratings. Furthermore, the rating agency was accused by the regulator of its failure to submit up-to-date rating information.
This post was last modified on Mar 24, 2023, 16:34 GMT 16:34