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Hong Kong tribunal fines Moody's HK$11M


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Hong Kong tribunal fines Moody's HK$11M

Hong Kong's Securities and Futures Appeals Tribunal ruledthat Moody's Corp.'sHong Kong unit did have lapses in publishing a July 2011 report that resultedin the decline of certain Chinese company shares, but decided to lower finesimposed against the rating agency to HK$11 million from HK$23 million.

In its decision published March 31, the tribunal that Moody's InvestorsService Hong Kong Ltd. breached certain provisions in the Securities andFutures Commission's code of conduct when it published the report titled"Flags For Emerging-Market Companies: A Focus on China." Shares ofsome Chinese companies plummeted after the report tagged them as having a highnumber of red flags.

The developments prompted Hong Kong's Securities and FuturesCommission to initiate an investigation into the report. The commissionconcluded in 2014 that Moody's Investors Service Hong Kong made certain lapsesin publishing its report, including factual inaccuracies.  

The tribunal upheld the commission's findings but loweredthe fine to HK$11 million, citing that the rating agency was carrying on itsregulated activity of providing credit rating services when it released thereport. It also said Moody's has 30 days to challenge the decision.