The European Securities and Markets Authority (ESMA) has imposed a fine of EUR 420,000 on Modefinance S.r.l. due to a violation of the Credit Rating Agencies Regulation (CRA Regulation). The organization discovered that Modefinance improperly referenced ESMA in a manner that suggested endorsement or approval of its credit ratings and related activities.
Between September 2018 and October 2021, Modefinance made multiple statements on its websites claiming that ESMA had “certified” or “validated” specific models utilized in their scoring and credit rating functions. This misrepresentation of ESMA’s involvement could potentially mislead investors and affect the integrity of European financial markets.
Verena Ross, the Chair of ESMA, emphasized the severity of the issue, stating that Modefinance’s actions wrongfully led to the belief that its rating activities were endorsed by ESMA. This kind of misleading information can have far-reaching implications for market confidence and investor behavior.
The fine was determined after a thorough review, incorporating both factors that could worsen the situation and those that might mitigate the fine as outlined in the CRA Regulation. The breach was ultimately classified as a result of negligence from Modefinance’s side.