ESMA Fines Fitch for Ratings Rules Breaches
Over an 18-month period, ESMA found nine instances where Fitch analysts shared information with Fitch's parent company, in breach of ESMA rules.
Following an investigation of credit rating agencies that took place in 2013, ESMA discovered evidence that senior analysts at Fitch had shared information about upcoming ratings actions with executives at Fitch parent Fimalac. ESMA's rules covering rating agencies prohibit agencies from sharing this information with anyone except those involved in creating the ratings.
Between December 2010 and June 2012, ESMA identified nine separate email exchanges sharing prohibited data about upcoming ratings actions, covering Greece, France, Ireland, Italy, Portugal and Spain.
In addition, ESMA found that on Jan. 27, 2012, Fitch did not provide Slovenia the requisite 12 hours to respond to detailed information about its intent to downgrade the country's sovereign rating, and there were "substantial shortcomings" in Fitch's internal controls to comply with the 12-hour requirement, including unclear guidance, a "lack of sound internal controls," and inadequate internal follow-up actions.
ESMA says that when setting the amount of the fine, it took into account that fact that Fitch has voluntarily taken steps to prevent similar infringements in the future.
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