Moody's denied privacy in appeal against SFC
Markets tribunal overturns ratings agency's request for privacy in appeal against a fine imposed for issuing a 'red flags' report
A markets tribunal has overturned a request by Moody's Investors Service for privacy in its appeal against the Securities and Futures Commission's decision to fine the ratings agency HK$23 million.
The commission had fined Moody's HK$23 million and publicly reprimanded the agency for breaching the code of conduct by issuing a "red flags" report on Chinese companies in July 2011.
Moody's had appealed against the decision and sought that the proceedings be held in private but the Securities and Futures Appeals Tribunal chairman Michael Hartmann rejected the request and unveiled the case on the tribunal website yesterday.
Tribunal documents show that on November 24, Moody's appealed to the tribunal against an SFC decision on November 3 to fine it HK$23 million and publicly reprimand it for breaching the code of conduct by publishing a report titled "Red Flags for Emerging Market Companies: A Focus on China".
The Moody's report warned of red flags at 61 companies it examined, highlighting risky or opaque business models, poor quality of earnings and cash flow, and concerns over the quality of financial statements.
The Hang Seng Index fell 689 points the day after the report was published while borrowing costs of the firms named in the report rose.
The tribunal document did not give details about the instances of Moody's supposed misconduct but only said that Moody's sought to challenge both the SFC findings and penalties, and sought to keep the appeal hearing and any order private.
