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.

In a response to the Esma action, the ratings agency said: “Moody’s acknowledges Esma’s findings and is pleased that this matter is closed. None of the findings related to the quality of our ratings or the supranational methodology itself. Esma also recognised that Moody’s took steps in 2013 to ensure that similar infringements did not occur in the future.”

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.


Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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