Europe's markets watchdog the European Securities and Markets Authority (ESMA) has issued a notice censuring Standard & Poor's ratings agency for the first time ever. The decision by ESMA to issue a public notice resulted from its investigation into the erroneous publication on 10 November 2011 by S&P to the subscribers of its Global Credit Portal of an email stating that credit rating of France was downgraded. Then, the representatives of the portal and Standard & Poor’s said that there was a technical glitch associated with the S&P's internal database, where it maintained its credit ratings; it was also used for storing its Banking Industry Country Risk Assessments (BICRAs). The erroneous email was sent out after S&P attempted to change an incorrect display of France's BICRAs. However, neither France nor ESMA were satisfied with the public acknowledgment saying that "this incident was the result of a failure by S&P to meet certain organizational requirements set out in the CRA Regulation, relating to sound internal control mechanisms, effective control and safeguard arrangements for information processing systems and decision-making procedures and organizational structures". The move by ESMA marks the first time it has publicly reprimanded a company since being given the power to regulate EU credit rating agencies in 2012. It is worth noting that beyond censuring companies, the watchdog’s powers include withdrawing a company’s registration. This is not the first complaint against the three leading rating agencies S&P, Moody's and Fitch. In early February, the Italian Chamber of Commerce was considering filing a lawsuit against the agency in the amount of 234 billion euros. It said that during the financial crisis in 2011 the agency underestimated the financial potential of Italy, thereby causing damage to the state and scaring away investors.
