Esma hits Moody’s with €1.24m fine

Ratings agency Moody’s has been hit with a €1.25m fine for breaking credit ratings rules.

The European Securities and Markets Authority fined Moody’s Deutschland GmbH (Moody’s Germany) €750,000 and Moody’s Investors Service Limited (Moody’s UK) €490,000, and issued a public notice.

The Authority said that the two Moody’s businesses “negligently committed two infringements of the CRAR [Credit Rating Agencies Regulation] regarding their public announcement of certain ratings and their public disclosure of methodologies used to determine those ratings.”

“These failures concern 19 ratings issued between June 2011 and December 2013 for nine supranational entities including the European Investment Bank, the European Investment Fund, the European Stability Mechanism, the European Financial Stability Facility and the European Union.”

Among the shortcomings noted by Esma regarding the 19 ratings issued, it noted that they “included no other material sources of public information than press releases”, that they “failed to indicate the principle methodology used for the ratings decision and failed to refer to any comprehensive descriptions of the methodology used.”

Furthermore, Moody’s failed to publicly disclose its methodology for some six months after the infringement occurred, Esma said.

“Given the role of CRAs and ratings in financial markets, and their impact on investor trust and confidence, it is essential that high standards of transparency, are maintained and enforced,” Esma stressed.

The Authority noted that Moody’s Germany and Moody’s UK may appeal to the Board of Appeal of the European Supervisory Authorities.

Esma has previously taken enforcement action, including fining other ratings agencies, such as Fitch Ratings Ltd (fined €1.38m), DBRS Ratings Ltd Decision (€30,000) and Standard & Poor’s Credit Market Services France SAS and Standard & Poor’s Credit Market Services Europe Ltd.

Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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