EU Fines Moody's for its Credit Rating of EU Financial Bodies

The European Securities and Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) announced today that it has fined the credit rating agency Moody's €1.24 million for what it describes as two CRAR (Credit Rating Agencies Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term) credit ratings breaches.

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ESMA says that it found that Moody’s Germany and Moody’s UK negligently committed two infringements of the CRAR regarding their public announcement of certain ratings and their public disclosure of methodologies used to determine those ratings.

These alleged failures concern nineteen 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.

Giving countries a rating that they do not like can always be a sensitive issue for agencies of course. When Moody’s lowered China’s long term currency issuer ratings last week the Chinese Ministry of Finance also claimed that the organization used an “inappropriate” method.

Moody’s breaches of the CRA Regulation according to ESMA:

The public announcement of the nineteen ratings issued by Moody’s Germany and Moody’s UK between June 2011 and December 2013 included no other material sources of public information than press releases. These failed to indicate the principal methodology used for the ratings decisions and failed to refer to any comprehensive descriptions of the methodology used.

The methodology used in each of the nineteen ratings issued by Moody’s Germany and Moody’s UK between June 2011 and December 2013 was not the subject of any separate public disclosure either before or after the public rating announcements. This Infringement continued for more than six months.