S&P Fined $2.5 Million for Sales & Marketing Team Involved in Credit Rating Process, Pressured S&P Analytics Team to Use Wrong Preliminary Ratings Alr
New York City, United States Caproasia.com | The leading source of data, research, information & resource for investment managers, professional investors, UHNW & HNW investors, and advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Caproasia - Learn more This site is for accredited investors, professional investors, investment managers and financial professionals only. You should have assets around $3 million to $300 million or managing $20 million to $3 billion. 
S&P Fined $2.5 Million for Sales & Marketing Team Involved in Credit Rating Process, Pressured S&P Analytics Team to Use Wrong Preliminary Ratings Already Shared to Clients to Rate Jumbo Residential Mortgage Security 17th November 2022 | Hong Kong
S&P Global Ratings, one of the top 3 credit rating agencies alongside Moody’s and Fitch, had been fined $2.5 million by United SEC (Securities & Exchange Commission) for S&P sales & marketing team being involved in credit rating process to rate a jumbo residential mortgage-backed security transaction in July 2017, pressuring S&P analytics team to use wrong preliminary ratings already shared to clients for commercial reasons (sales consideration) and thus violating the conflict of interest rule. United States Chief of SEC’s Complex Financial Instruments Unit: “NRSROs are prohibited from issuing or maintaining a credit rating where an individual who participates in sales and marketing activity seeks to influence the determination of the rating. Credit rating agencies play a systemically important role in the structured products markets, and the federal securities laws require them to insulate their analytical functions from the influence of business considerations.” (Nationally Recognized Statistical Rating Organization, NRSRO). After discovering the circumstances surrounding the rating of the transaction, S&P self-reported the conduct at issue to the SEC, cooperated with the SEC’s investigation, and took remedial steps to enhance its conflicts of interest policies and procedures.
“ S&P Fined $2.5 Million for Sales & Marketing Team Involved in Credit Rating Process, Pressured S&P Analytics Team to Use Wrong Preliminary Ratings Already Shared to Clients to Rate Jumbo Residential Mortgage Security “
Ads & Announcements
The Case – The SEC’s order finds that an issuer engaged S&P to rate a jumbo residential mortgage backed security transaction in July 2017. Over a five-day period in August 2017, S&P commercial employees—employees responsible for managing the relationship with the issuer—on several occasions attempted to pressure the S&P analytical employees—employees responsible for evaluating and assigning the rating—to rate the transaction consistent with preliminary feedback the analytical employees had given the customer that turned out to include a calculation error. Despite sending the communications through the compliance department as required by S&P’s policies and procedures at that time, some emails sent by the S&P commercial employees to the S&P analytical team contained statements reflecting sales and marketing considerations. The order finds that, as a result of the content, urgent nature, high volume, and compressed timing of the communications, the S&P commercial employees became participants in the rating process during a time when they were influenced by sales and marketing considerations.
United States SEC Charges S&P Global Ratings with Conflict of Interest Violations
New York City, United States 14/11/22 – The Securities and Exchange Commission today charged S&P Global Ratings, a nationally recognized statistical rating organization (NRSRO) registered with the Commission, with violating conflict of interest rules designed to prevent sales and marketing considerations from influencing credit ratings.
The SEC’s order finds that an issuer engaged S&P to rate a jumbo residential mortgage backed security transaction in July 2017. Over a five-day period in August 2017, S&P commercial employees—employees responsible for managing the relationship with the issuer—on several occasions attempted to pressure the S&P analytical employees—employees responsible for evaluating and assigning the rating—to rate the transaction consistent with preliminary feedback the analytical employees had given the customer that turned out to include a calculation error. Despite sending the communications through the compliance department as required by S&P’s policies and procedures at that time, some emails sent by the S&P commercial employees to the S&P analytical team contained statements reflecting sales and marketing considerations. The order finds that, as a result of the content, urgent nature, high volume, and compressed timing of the communications, the S&P commercial employees became participants in the rating process during a time when they were influenced by sales and marketing considerations.
“NRSROs are prohibited from issuing or maintaining a credit rating where an individual who participates in sales and marketing activity seeks to influence the determination of the rating,” said Osman Nawaz, Chief of the SEC’s Complex Financial Instruments Unit. “Credit rating agencies play a systemically important role in the structured products markets, and the federal securities laws require them to insulate their analytical functions from the influence of business considerations.”
After discovering the circumstances surrounding the rating of the transaction, S&P self-reported the conduct at issue to the SEC, cooperated with the SEC’s investigation, and took remedial steps to enhance its conflicts of interest policies and procedures.
The order finds that, by issuing and maintaining these credit ratings, S&P violated certain rules promulgated under the Securities Exchange Act of 1934, which prohibit conflicts of interest at NRSROs, and also failed to establish, maintain, and enforce written policies and procedures designed to ensure compliance with those rules. Without admitting or denying the SEC’s findings, S&P agreed to settle this matter by paying a $2.5 million penalty and agreeing to the entry of a cease-and-desist order, a censure, and compliance with certain undertakings.
The SEC’s investigation was conducted by Jason Litow and Jennifer Brannan and was supervised by Jeffrey Weiss and Yuri B. Zelinsky. James Connor of the Enforcement Division’s Trial Unit and staff of the SEC’s Office of Credit Ratings assisted with the investigation.
2021 Data Release 2020 List of Private Banks in Hong Kong2020 List of Private Banks in Singapore 2020 Top 10 Largest Family Office2020 Top 10 Largest Multi-Family Offices2020 Report: Hong Kong Private Banks & Asset Mgmt - $4.49 Trillion2020 Report: Singapore Asset Mgmt - $3.48 Trillion AUM Register Below Latest 2022 data & reports, insights & news Every Saturday & Sunday 2 pm Direct to your inbox Save 2 to 8 hours per week. Organised for success For Investors | Professionals | Executives New to Caproasia? Join 10,000 + Learn More | Sign Up Today Caproasia.com | Caproasia Access 2022 Events | TFC - Find Services Grow Business | Contact Us For CEOs, Heads, Senior Management, Market Heads, Desk Heads, Financial Professionals, Investment Managers, Asset Managers, Fund Managers, Hedge Funds, Boutique Funds, Analysts, Advisors, Wealth Managers, Private Bankers, Family Offices, Investment Bankers, Private Equity, Institutional Investors, Professional Investors Get Ahead in 60 Seconds. Join 10,000 + Save 2 to 8 hours weekly. Organised for Success. Subscribe / Sign Up / Contact Us Sign Up / Subscribe:
Mailing ListFree TrialInvestor $680 YearlyProfessional $680 YearlyExecutive $2,000 Yearly
Interests / Events / Summits / Roundtables / Networking:
Private WealthFamily OfficePrivate BankingWealth ManagementInvestmentsAlternativesPrivate MarketsCapital MarketsESG & SICEO & EntrepreneursTax, Legal & RisksHNW & UHNWs Insights
Your Name*
Company*
Job Title*
Email 1 (Work / Personal)*
Email 2 (Work / Personal)
Contact No.
Country
Your Message (leave blank if none)
Owl Media Group takes pride in providing social-first platforms which equally benefit and facilitate engagement between businesses and consumers and creating much-needed balance to make conducting business, easier, safer, faster and better. The vision behind every platform in the Owl Media suite is to make lives better and foster a healthy environment in which parties can conduct business efficiently. Facilitating free and fair business relationships is crucial for any thriving economy and Owl Media bridges the gap and open doors for transparent and successful transacting. No advertising funds influence the functionality of our media platforms because we value authenticity and never compromise on quality no matter how lucrative the offers from advertisers may seem.