The Wirecard scandal has made for an engrossing account of corporate failure since the news emerged that the German financial payments processing company had been inflating its accounts. Now that the company has collapsed – the first time that a member of the German Dax index has failed – the ramifications are starting to be revealed. The EU is now investigating the role played by BaFin , the German regulator tasked with regulating the company, whilst the FCA in the UK has ordered the British arm of the company to freeze all of their customers’ accounts . Now that the aftermath is continuing to fold, the focus is now rightly turning to why the alarm bells were not sounded earlier by those both paid and expected to do so.   Of particular concern has been the auditing conducted by Ernst & Young (EY), and the credit rating conducted by Moody’s. With investors standing to lose out considerably because of this collapse, the performance of these gatekeepers is a massively importan

There have been a number of developments recently with regards to the Securities and Exchange Commission receiving advice on how best to regulate the credit rating industry. Last month, a panel was convened so that the Investor Advisory Committee could hear from a number of experts on some of the issues facing the industry, and some potential solutions. Then, at the beginning of this month, the Credit Ratings Subcommittee of the Fixed Income Market Structure Advisory Committee (FIMSAC) produced a recommendation outlining three key areas for regulatory development. In light of this, this post will review the developments, and also examine whether the calls are realistic, or whether they may spurn the SEC into more action in this area.   The meeting of the SEC’s Investor Advisory Committee took place on the 21 st May, virtually – recording available here . In the afternoon, a panel was convened that was made up of: Professor Frank Partnoy of the University of California, Berkeley;

We have covered the European-based Scope Ratings a number of times in Financial Regulation Matters , here , here , and here . Also, recently the agency has received positive reviews in the financial press, with one outlet prescribing Scope Ratings as ‘ the new challenger ’ to the credit rating space, complete with a new approach. However, it was announced today that Scope Ratings had been fined by ESMA for a practice which is particularly familiar in the ratings arena – saying one thing and doing another.   The news broke this morning that ESMA had fined Scope for breaches of the Credit Rating Agencies Regulations (CRAR), to the tune of €640,000 . ESMA also published a ‘ public notice ’ explaining the reason for the regulatory action. The regulator found that there were a number of breaches, with the fine being divided between: a failure to apply a methodology systematically (€550,000); and a failure to revise methodologies (€90,000). The action revolves around the time of 2015, a

Last year we reviewed a new entrant into the financial information landscape, with the start-up Sigma Ratings which exists to provide focused and specialised information regarding anti-money laundering and its effects on creditworthiness (amongst a number of other aims). In today’s short post we will be introduced to another start-up aiming to impact the marketplace, this time in the field of information relating to commercial real estate intelligence, which is particularly apt given the market shift in focus to commercial mortgage-backed securities over the past few years – that company is CRED iQ .   CRED iQ, founded by Bill Petersen and Michael Haas , has the expressed aim of providing the marketplace with a flagship platform which provides for interactive commercial real estate valuation, CMBS monitoring, and also involves a ‘ lead generation platform delivering objective risk assessments to CRE (Commercial Real Estate) and capital market investors ’. The innovative platform