European regulators say that internal control failures at Standard & Poor’s allowed the mistaken distribution of an email erroneously suggesting that France’s credit rating had been downgraded.
The European Securities and Markets Authority (ESMA) issued a public notice Tuesday censuring Standard & Poor’s Credit Market Services France SAS and Standard & Poor’s Credit Market Services Europe Ltd. for breaches of its rules for credit rating agencies.
The censure follows an investigation into the erroneous publication of an email by S&P back in November 2011 to the subscribers of its ‘global credit portal’ suggesting that France’s sovereign rating have been downgraded; when, in fact, S&P’s rating of France had not been downgraded.
The ESMA says that it found that this incident was the result of “a failure by S&P to meet certain organizational 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 organizational structures.”
It concluded that these breaches warranted a supervisory measure in the form of a public notice, but not a fine or other more severe sanction. “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,” it says.