.jpg)
The European Securities and Markets Authority (ESMA) has issued a public notice censuring DBRS Ratings Limited (DBRS) for failing to comply with corporate governance, compliance and record-keeping requirements under the Credit Rating Agencies Regulation (CRA Regulation).ESMA has also fined DBRS €30,000 in respect of the record-keeping failings having found that DBRS had acted negligently.ESMA’s decision takes into account the steps taken by DBRS to remedy the infringement.
The decision by ESMA to take enforcement action results from its prior investigation into DBRS. That investigation examined corporate governance, compliance and internal control functions of DBRS.ESMA has found that DBRS did not meet the following requirements set out in the CRA Regulation regarding:
- adequate record-keeping and, where appropriate, audit trails of its credit rating activities, including records for compliance-related issues;
- sound internal procedures and control mechanisms, including decision-making procedures, reporting lines and allocation of functions and responsibilities; and
- a permanent and effective compliance function which has the necessary authority, resources, expertise and access to all relevant information.
ESMA, based on the provisions of the CRA Regulation, decided that the relevant breaches warranted enforcement action. This is the first fine imposed on a Credit Rating Agency under the CRA Regulation.
ESMA’s Role
Since July 2011, ESMA has been solely responsible for the supervision of credit rating agencies in the European Union, including their registration, in line with the requirements of the CRA Regulation. ESMA has the power to take appropriate enforcement action where it discovers a breach of the CRA Regulation, ranging from the issuance of public notices to the imposition of fines and withdrawal of registration.
