ESMA fines Moody’s for conflict of interest breaches

ESMA has fined five entities in the Moody’s Group, based in France, Germany, Italy, Spain and the UK, a collective total of €3,703,000 and issued public notices for breaches of the Credit Ratings Agencies Regulation regarding independence and the avoidance of shareholder conflicts of interest.

The breaches related to:

• the issuance of credit ratings in violation of the ban on issuing new ratings on entities where a credit rating agency shareholder exceeds the 10% ownership threshold and/or is a board member of the rated entity;
• failure to disclose conflicts of interests related to the 5% ownership threshold; and
• inadequate internal policies and procedures to manage shareholder conflicts of interest.

All the breaches were found to have resulted from negligence on the part of Moody’s.