The European Securities and Markets Authority (ESMA) has fined Modefinance S.r.l. a total of EUR 420,000, and issued a public notice, for a breach of the Credit Rating Agencies Regulation (CRA Regulation).

ESMA found that Modefinance fell short of the CRA Regulation’s requirement not to use ESMA’s name in such a way that would indicate or suggest endorsement or approval by ESMA of the credit ratings or any credit rating activities of the credit rating agency.

Modefinance published several statements on its websites between September 2018 and October 2021, which referred to ESMA as having “certified”, or “validated” a model, used by Modefinance in its scoring and credit rating activities.

Verena Ross, ESMA’s Chair, said:

“Modefinance used ESMA’s name to incorrectly suggest ESMA’s endorsement of its credit rating activities. This could mislead investors and could have an impact on the proper functioning of EU financial markets.”

The breach was found to have resulted from negligence on the part of Modefinance. In calculating the fine, ESMA considered both aggravating and mitigating factors provided in the CRA Regulation.