The European Securities and Markets Authority (ESMA) has issued a public notice censuring Standard & Poor’s Credit Market Services France SAS and Standard & Poor’s Credit Market Services Europe Limited (S&P) for breaches of Regulation 1060/2009 (CRA Regulation).
Since July 2011 ESMA has been responsible for regulating credit rating agencies (CRAs) in the European Union (EU) including their registration and supervision in line with the requirements of the CRA Regulation. ESMA has the power to take appropriate enforcement action where it discovers a breach of the CRA Regulation, ranging from the issuance of public notices to the withdrawal of registration and imposition of fines.
ESMA’s decision to issue a public notice results from its investigation into the erroneous publication on 10 November 2011 by S&P, to the subscribers of its Global Credit Portal (GCP), of an email erroneously stating that S&P’s rating of France had been downgraded.
ESMA found that this incident was the result of a failure by S&P to meet certain organisational requirements set out in the CRA Regulation, relating to sound internal control mechanisms, effective control and safeguard arrangements for information processing systems and decision-making procedures and organisational structures.
ESMA, based on the provisions of the CRA Regulation, decided that the relevant breaches warranted a supervisory measure in the form of a public notice. The final decision on the supervisory measure took into account the steps taken by S&P to end the infringement and was considered proportionate to the seriousness of the breach.
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