ESMA fines S&P €1.11 million for failures related to the premature release of credit ratings to the public
ESMA fines S&P; €1.11 million for failures related to the premature
release of credit ratings to the
public
Sarah.Edwards@…
24 March 2023
Board of
Supervisors
Credit Rating Agencies
Press
Releases
The European Securities and Markets Authority (ESMA),
the EU’s financial markets regulator and supervisor, has fined S&P;
Global Ratings Europe Limited (S&P;) a total of EUR 1,110,000, and
issued a public notice for breaches of the Credit Rating Agencies
Regulation (CRA Regulation).
ESMA found that S&P; published
credit ratings before the concerned securities were issued by the
rated entities and announced to the market. This was due to internal
control failures and led to breaches by S&P; of its transparency
obligations.
Verena Ross, ESMA’s Chair, said:
“Today’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.
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.”
The breaches covered by the fine
specifically relate to:
deficiencies in S&P;’s internal control
mechanisms, which did not ensure compliance with its obligations
regarding the timely disclosure of credit ratings;
the failure
by S&P; to disclose on a non-selective basis and in a timely manner
decisions to discontinue credit ratings;
the failure by S&P; to
submit up-to-date rating information to ESMA.
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.
S&P;’s Breaches of
the Credit Rating Agencies Regulation
Internal controls
infringement
ESMA found that the flaws in the internal control
procedures and the way in which those procedures were implemented led
S&P; to release credit ratings prematurely. In particular, ESMA found
that between 5 June 2019 and 8 September 2021, S&P; released solicited
credit ratings regarding six issuers prematurely, i.e. the credit
ratings were published by S&P; before the issuance of the securities
by the rated entities and announcement to the market. Consequently,
ESMA fined S&P; EUR 825,000 for not having internal control mechanisms
to ensure compliance with its obligations regarding the timely
disclosure of credit ratings.
Infringements related to
transparency obligations
ESMA found that, between 2019 and
2021, in six instances, S&P; removed, without providing explanations,
credit ratings from its public platforms. Consequently, ESMA fined
S&P; EUR 210,000 for failing to disclose on a non-selective basis and
in a timely manner decisions to discontinue credit
ratings.
ESMA also found that in relation to one rated entity,
S&P; did not ensure that the information it submitted to ESMA for
publication on the European Rating Platform (ERP) was correct and up
to date. Consequently, ESMA fined S&P; EUR 75,000.
Right to
appeal
S&P; may appeal against this decision to the Board of
Appeal of the European Supervisory Authorities. Such an appeal does
not have suspensive effect, although it is possible for the Board of
Appeal to suspend the application of the decision in accordance with
Article 60(3) ESMA
Regulation.
24/03/2023
ESMA43-475-60
Public
Notice - S&P; Global Ratings Europe
Limited
24/03/2023
ESMA43-475-40
BoS Decision -
S&P; Global Ratings Europe
Limited
24/03/2023
ESMA43-475-63
ESMA fines S&P;
€1.11 million for failures related to the premature release of credit
ratings to the public - Press Release