S&P Global pays 2.4 million to settle US conflict of interest investigation

Madrid, November 15 (European press) –

Credit rating agency S&P Global has decided to pay $2.5 million (2.4 million euros) to settle an investigation by the U.S. Securities and Exchange Commission (SEC) in the event of conflicts of interest between its analysis and trading departments, the regulator said in a statement.

A company contacted S&P in July 2017 to evaluate a residential mortgage securitization transaction. For five days, employees of the commercial division of S&P, who are responsible for the relationship with that company, pressured the employees of the research division to evaluate this transaction based on previous calculations that included an error.

Additionally, direct communications between business and analysis personnel included sales information and marketing considerations. In this way, the commercial division participated in the onboarding process at a time when it was affected by sales considerations.

The director of complex financial instruments at the SEC, Usman Nawaz, explained that rating agencies are prohibited from issuing or maintaining a rating when an individual engaged in marketing or sales activity attempts to influence the determination of this credit rating.

Upon learning of this case, the Securities and Exchange Commission noted that Standard & Poor’s voluntarily notified the regulator, cooperated in the investigation, and took steps to resolve future conflicts of interest. In any case, the amount paid by the risk rating agency does not include acceptance or denial of facts.

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