Dagong punished for violations
Agency banned from rating operations for one year
One of China’s biggest credit rating agencies was jointly disciplined on Friday by the national financial market supervisory group and the regulator of the Chinese stock market for violating regulations and providing false information.
From November 2017 to March 2018, Dagong Global Credit Rating Co wrongly charged high consulting fees on the companies that the rating agency had rated while providing false documents to the National Association of Financial Market Institutional Investors (NAFMII), according to a statement published on the association’s website on Friday.
The agency has violated regulations related to self-discipline of credit rating services, which has negatively impacted the industry, the statement continued.
Dagong was then banned from the bond market business for one year due to such a conflict of interest, the NAFMII statement noted.
On the same day, the China Securities Regulatory Commission (CSRC) revealed some problems in Dagong’s governance system, including chaotic corporate management and some senior executives lacking adequate qualifications.
The CSRC’s Beijing office then ordered Dagong to rectify its business within a year, adding that it is not allowed to conduct new ratings business operations during this period, according to the securities regulator’s website.
Credit agencies should formulate scientific ratings methods, establish and improve the firewall system and prevent conflicts of interest, a CSRC spokesperson told a press briefing on Friday.
Dagong has rated over 10,000 enterprises in 70 sectors across 30 Chinese provinces and cities, with over one trillion yuan ($145.4 billion) worth of bond financing involved, according to its website.
Dagong said in a statement released later on Friday that it would make thorough changes under the guidance of the regulatory authorities and ensure that all of its businesses are in line with the law and relevant regulations.
“We have submitted the materials for appeal to the relevant departments on the issues that need to be explained while reserving the right to hold certain people who defame the company throughout this incident accountable for their actions,” Dagong noted.
Dagong is the only national credit rating agency that obtains the joint approval of the People’s Bank of China, the country’s central bank, as well as the State Economic and Trade Commission, a former department of the State Council, China’s cabinet, according to the agency’s website.