Simon Dingemans, the former finance chief for GlaxoSmithKline and long-term employee of Goldman Sachs, has surprisingly and abruptly quit his role as the Chairman of the Financial Reporting Council, less than a year after taking the helm. In this post we will look back at his tenure and find out why he has decided to move back into the private sector. We analysed Dingemans’ appointment late last year here in Financial Regulation Matters , where we discussed his taking aim at the auditing oligopoly that the FRC has responsibility for regulating. At the time, Dingemans stated that ‘ this is a rare opportunity to reform something so wholeheartedly ’, and he made the break-up of the ‘Big Four’ and their oligopolistic hold on the auditing marketplace a priority. However, since his appointment it has been business as usual. The regulator has continued investigating members of the oligopoly, whilst also calling on members to upgrade their auditing tools . This is nothing out of the ...

Late last year we discussed here in Financial Regulation Matters the news that Johnson & Johnson had been ordered to pay billions of dollars in damages for the side effects that talcum powder was causing. It had been suggested at the time that the spate of litigation could end up costing the giant conglomerate more than $20 billion and, just today, the news broke that the company would cease selling the product in the US and Canada. The talc-related saga for J&J is a long one. There has been a vast number of legal actions taken against the company, with a number of claimants being awarded large amounts, with one claim leading to $417 million in damages being awarded , and in another $4.7 billion to 22 women in the US . Interestingly Forbes said recently that J&J stock may be undervalued , but that may be about to change. The Financial Times is leading the way with the reporting that the company has dropped the sale of the product in the North American market , al...

Today’s short post is a short report on the news that S&P Global have today launched their new ‘ESG Scores’ into the marketplace. The move is the latest by the leading credit rating agencies to stake their claim to the ever-growing need for ESG-related information. The leading credit rating agencies, and the ‘Big Two’ of S&P and Moody’s have been making a concerted effort to increase the stake in the growing ESG-informational provider field. With S&P acquiring TruCost, and Moody’s acquiring Vigeo-Eiris, amongst other moves, the trajectory is perhaps set. I have argued elsewhere that this may result in particular outcomes for the current ‘sustainability rating industry’, and that trajectory is being proven all the time. Morningstar, earlier this year, purchased Sustainalytics outright . Moody’s acquired a majority stake in one of the oldest ‘sustainability rating agencies’ Vigeo-Eiris early last year. On top of acquiring TruCost in 2016, S&P followed that up wi...

Today’s short post provides two updates from the credit rating industry, with each providing particularly contrasting fortunes for the agencies involved. Morningstar Settles with the SEC The first story today involves Morningstar, an agency that has been trying to really carve a position for itself in the oligopolistic rating market . Morningstar had reason to be forward-looking this year with its purchase of Sustainalytics being completed in April. The development of the ESG-mainstreaming project means this purchase puts Morningstar in a string position. However, yesterday Morningstar settled with the SEC with regards to charges that it had violated regulations relating to the elimination of internal conflicts of interest. Specifically, the rule that credit rating analysts should not be involved with the sales and marketing efforts of the agency had been violated . The cost of this settlement has been reported to be $3.5 million, but the details provide flagrant breaches o...

Today’s post is just a very short alert on the publication of a report today by the EU. The report, entitled ‘Thematic Report: EU CLO credit ratings – an overview of Credit Rating Agencies practices and challenges’ is available here . The aim of the report is to examine the rating practices that underlay the development of collateralised loan obligations, with a particular focus on how risk is identified and transmitted within the process. There is also a distinct focus on the stress-testing that the agencies undertake for these products, with ESMA stating in their press release that they ‘ expect CRAs to continue to perform regular stress-testing simulations and to provide market participants with granular information on the sensitivity of CLO credit ratings to key economic variables affected by the pandemic ’. Steven Maijoor, the Chair of the Regulator, went further and stated that the regulator’s assessments of the agencies’ practices in this particular sector ‘ highlight a numb...

In today’s short post, a nuanced point that is being overlooked by many in the business press will be discussed regarding the news that Liberty Global, the owner of the UK-based Virgin Media company, is in talks with Telefonica regarding the purchase of its ‘02’ brand. One of the issues that is arising out of this proposed merger, on top of the competition-based issues that will no doubt arise, is how it will be possible and, more importantly, why it will be possible when recent attempts to buy 02 (from a number of companies) have been ruled out on competition-based grounds. It was reported late last week that Liberty Global – the massive telecommunications conglomerate ran by John Malone that also owns Formula One – was in talks with the owner of 02 – Telefonica – regarding the purchasing of the company. The supposed merger would be a 50/50 split between Virgin Media and 02, and Liberty Global would need to make a payment to Telefonica to equalise the ownership. The move w...