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ESMA fines Fitch Ratings Limited €1.38 million

21 July 2016

The European Securities and Markets Authority (ESMA) has fined Fitch Ratings Limited (Fitch) €1.38 million for a series of negligent breaches of the Credit Rating Agencies (CRA) Regulation and has published the Decision of the ESMA Board of Supervisors and a Public Notice in relation to this action.

ESMA found certain senior analysts in Fitch transmitted information about upcoming rating actions on sovereign ratings to certain senior persons in a parent company of Fitch before it was made public. Further, ESMA found that Fitch failed to have proper internal controls in place to ensure it provided a rated entity with the minimum time period to consider and respond to a rating action before making it public. Fitch failed to allow Slovenia 12 hours (the minimum required period at the time) to consider and respond to the downgrade of its sovereign rating in 2012, as required under the CRA Regulation.

ESMA carried out a review of the sovereign rating processes of a number of CRAs during 2013, focused on the period from 1 September 2010 to 25 February 2013, which led to ESMA identifying a number of potential breaches by Fitch of the CRA Regulation. ESMA’s findings and actions are summarised here.