20% of Fitch subsidiaries in France, Britain, and Spain had been affected by the conflict of interest.
On Thursday, the European Union’s markets watchdog, the European Securities and Markets Authority (ESMA), has fined credit rating agency Fitch a record $5.78 million (5.13 million euros) for breaching rules aimed at avoiding conflicts of interest.
According to ESMA, from June 2013 to April 2018, 20% of Fitch subsidiaries in France, Britain, and Spain were indirectly owned by an individual through an entity in France.
At the same time the shareholder, whom ESMA has not named, was sitting on the boards of three entities being rated by the three subsidiaries of Fitch, said ESMA.
None of the breaches had an impact on the outcome of the ratings, and its interpretation of the EU regulations on disclosing the identity of shareholders was made in good faith, said ESMA.
“We no longer have single individual shareholders who may be in a position to sit on the boards of rated entities,” said Fitch in a statement.
Fitch is owned by U.S. publisher Hearst after buying stakes from France’s Fimalac. It is one of the “Big Three” credit rating agencies, along with Standard & Poor’s and Moody’s that dominate the sector globally.
According to ESMA, the fine reflects measures voluntarily taken by the three Fitch subsidiaries to ensure similar infringements could not be committed in the future.
($1 = 0.8882 euros)