The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has fined Moody’s Deutschland GmbH (Moody’s Germany) a total of EUR 2,145,000, for committing breaches of the Credit Rating Agencies Regulation (CRA Regulation).

ESMA’s investigation found four breaches by Moody’s Germany of the CRA Regulation:

• Infringement regarding reports to the European Rating Platform

Moody’s Germany failed to ensure that the information about credit ratings and rating outlooks that it reported to ESMA and published on the European Rating Platform, both on its own behalf and on behalf of other EU CRAs within its group, was correct. This infringement was repeated and manifested in various forms, including missing ratings and rating actions, non-withdrawn ratings, and errors in the submitted information. ESMA fined Moody’s Germany EUR 292,500 in this respect.

• Infringement regarding reports to ESMA’s central repository

Moody’s Germany submitted to ESMA incomplete or incorrect historical performance data and credit rating changes to be made available in ESMA’s central repository, both on its own behalf and on behalf of other EU CRAs within its group. These deficiencies persisted over an extended period of time. ESMA fined Moody’s Germany EUR 202,500 in this respect.

• Infringement regarding policies and procedures

The main documents governing the reporting to ESMA by Moody’s Germany (also on behalf of other EU CRAs within its group) lacked clarity as to the allocation of responsibilities and the validation of submissions, and were not properly reviewed or updated. In particular, there was no established process to correct errors in submissions. ESMA fined Moody’s Germany EUR 825,000 in this respect.

• Infringement regarding internal control

Moody’s Germany’s internal control framework had important shortcomings in its internal control mechanisms and risk assessment regarding its reporting obligations (also on behalf of other EU CRAs within its group). It did not ensure adequate checks, and roles and responsibilities within the control framework lacked clarity. ESMA fined Moody’s Germany EUR 825,000 in this respect.

The errors affected only data submitted by Moody’s Germany to ESMA (including when acting on behalf of other CRAs within its group) and published on ESMA’s central platform. They did not affect the credit ratings published on Moody’s Germany’s website. However, complete and accurate reporting under the CRA Regulation is key to enabling ESMA to fulfill its statutory objectives, protect investors and foster the orderly functioning of financial markets.

ESMA also identified deficiencies in Moody’s Germany’s regulatory reporting framework, including its policies, procedures and internal control mechanisms.

The breaches were found to have resulted from negligence on the part of Moody’s Germany. In calculating the fine, ESMA considered both aggravating and mitigating factors provided in the CRA Regulation.

Moody’s Germany may appeal against this decision to the Board of Appeal of the European Supervisory Authorities. Such an appeal does not have suspensive effect, although the Board of Appeal may decide to suspend the application of the decision if requested to do so, in the context of an appeal.