Moody’s taken to court over dodgy ratings report
Ratings Agency Moody’s is appealing a HK$11 million ($1.4 million) fine after being accused of breaching Hong Kong’s regulatory code of conduct by using an unsubstantiated 2011 report on listed companies as a credit-rating tool.
The regulatory panel in March affirmed an action against the company by the Securities and Futures Commission for breaching the regulator’s code of conduct when it published a report on dozens of Chinese companies, Bloomberg reported.
“The tribunal has been drawn to the conclusion that there was a failure in clear and unambiguous terms to set out the true nature and purpose of the red flag framework,” the tribunal panel said in its March ruling.
“The evidence indicates that the market understood the red flag framework as providing some form of ranking system of credit risk and acted accordingly.”
Moody’s recently rated South Africa at “Baa2”, one notch higher than fellow ratings agencies S&P and Fitch, and two notches above junk status. It currently rates the country as having a negative outlook.
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