Major ratings agency S&P fined €1.11m by EU financial markets regulator

Some of the breaches related to internal controls failures in the ratings agency.

Major ratings agency S&P has been fined €1.11m by the EU’s financial markets regulator for breaches which were caused by negligence.

The European Securities and Markets Authority found that the European arm of S&P Global released credit ratings prematurely before concerned securities were issued by the rated entities and announced 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,” said , ESMA chair Verena Ross.

Some of the breaches related to internal controls failures in the ratings agency. Between June 2019 and September 2012, S&P released solicited credit ratings regarding six issuers prematurely.

S&P Europe was also found to have breached transparency obligations. Between 2019 and 2021, in six instances, S&P removed, without providing explanations, credit ratings from its public platforms.

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.

The ESMA also issued a public notice for breaches of the Credit Rating Agencies Regulation CRA Regulation.

S&P has been registered in the EU since October 2011 and is based in Ireland. ESMA has been responsible for the supervision of credit rating agencies in the WU including their registration, in line with the requirements of the CRA Regulation.

This is not the first time S&P has been hit with criticism. In the US, the Securities and Exchange Commission accused S&P of fraudulent misconduct after the 2008 financial crisis. It said the ratings agency loosened standards on its ratings to get more business.