Here are the flaws in Moody’s reports also on Italian companies
The European Financial Markets Authority (ESMA) fined 5 divisions of the Moody's group established in Italy, France, Germany, Spain and the United Kingdom for over € 3 million. Here are the companies analyzed by the rating agency in conflict of interest
ESMA'S FINE AT MOODY'S
The European Financial Markets Authority (ESMA) fined 5 divisions of the Moody's group established in Italy, France, Germany, Spain and the United Kingdom for 3.703 million euros for violating the European regulation on rating agencies in relation to independence and prevention of shareholder conflicts of interest.
WHAT IT IS AND WHO ARE THE MEMBERS OF MOODY'S
Moody's, the most important rating agency in the world along with Standard and Poor's and Fitch, is listed on Wall Street and participated by Berkshire Hathaway (the company of the financier Warren Buffet) with 13%, from the Vanguard fund (6.9%) , Blackrock (3.9%) and a dozen other asset managers with decreasing stakes.
VIOLATIONS OF MOODY'S FOUNDED BY ESMA
The alleged violations of ESMA concern in particular the issuing of ratings contrary to the prohibition of defining new valuations of companies in which one of its shareholders exceeds 10% and / or has representatives on the board; failure to disclose conflicts of interest relating to the 5% shareholding threshold as well as inadequate internal policies and procedures for managing shareholder conflicts of interest. The alleged violations occurred in the period 2013-2017.
THE PREVIOUS AND THE PRESENT
Two years ago Fitch received a 5 million euro fine for essentially the same reasons. Interventions that raise the never resolved question of the potential conflicts of interest of these agencies. Among their shareholders there are funds that have key stakes in companies on which the agency itself expresses assessments of financial solidity that also affect their stock market value. In theory, there should be impassable barriers between the agency's activities and its members. According to Esma , and according to many observers, this is not always the case.
THE POST OF NICOLA BORZI
Nicola Borzi, an expert in finance and banking journalist, formerly at Sole Ore and now freelance (now he writes mainly in the Fatto Quotidiano ) wrote on Facebook: "On March 28, 2019 it was the turn of Fitch, fined for 5.13 million, yesterday at Moody's which will have to pay 3.7. Esma sanctioned it for omissions in transparency on conflicts of interest: it did not disclose that its significant shareholders were also shareholders of 101 companies subject to as many as 206 reports issued between January 1, 2013, the date of entry into force of the EU rules on conflicts of interest, and September 4, 2017. Everyone wrote this. But no one seemed to be wondering who the relevant shareholders and the companies analyzed were. I asked Esma. They sent me the papers. Just to remain among the giants subject to conflicting ratings, there are Alcatel-Lucent, Sky, STMicroelectronics, Continental, Valeo, Julius Baer, Lloyds, Ubs, Volkswagen, Zurich, Shell, Bp, easyJet, Lufthansa, Glencore, Diageo, Tesco , AstraZeneca, GlaxoSmithKline, Aegon and Rbos (7 reports each), Hsbc (9), #ArcelorMittal (11), Ing and National Westminster Bank (15 each), Unilever (17) and Barclays (18). In Italy BancoPopolare and Telecom, two ratings on Intesa Sanpaolo and four on Ubi International ”. ( here the article by Borzi ).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutte-le-magagne-dei-report-di-moodys-anche-su-societa-italiane-tutti-i-dettagli/ on Wed, 31 Mar 2021 10:32:07 +0000.