Sector developments and company hires

Conflict of interest charge settled

The US SEC has charged S&P with violating conflict of interest rules designed to prevent sales and marketing considerations from influencing credit ratings, in connection with a jumbo RMBS it was engaged to rate in July 2017. The SEC’s order finds that over a five-day period in August 2017, S&P commercial employees on several occasions attempted to pressure the S&P analytical employees to rate the transaction consistent with preliminary feedback the analytical employees had given the customer that turned out to include a calculation error.

Despite sending the communications through the compliance department, as required by S&P’s policies and procedures at that time, some emails sent by the S&P commercial employees to the S&P analytical team contained statements reflecting sales and marketing considerations. The order finds that, as a result of the content, urgent nature, high volume and compressed timing of the communications, the S&P commercial employees became participants in the rating process during a time when they were influenced by sales and marketing considerations.

After discovering the circumstances surrounding the rating of the transaction, S&P self-reported the conduct at issue to the SEC, cooperated with the SEC’s investigation and took remedial steps to enhance its conflicts of interest policies and procedures. Without admitting or denying the SEC’s findings, S&P agreed to settle this matter by paying a US$2.5m penalty and agreeing to the entry of a cease-and-desist order, a censure and compliance with certain undertakings.

In other news….

North America

Alternative asset manager, Atalya, has recruited structured finance veteran, Bharath Subramanian, to lead the expansion of its capital solutions business. Subramanian will join the firm as an md in its specialty finance division, which concentrates on providing capital to consumer finance, commercial finance and other financial services businesses. He joins Atalya from Bayview Asset Management, where he most recently helped lead its expansion into private equity and special situations investing and brings with him a wealth of experience in handling investments and client relationships, bolstering the firm’s capital solutions capabilities. In his new role, Subramanian will work alongside the firm’s investment team to source and complete asset financings, portfolio purchases, corporate level debt solutions, equity transactions and an array of other structured capital solutions.

Paul Petkov has joined ATB Financial as md, credit portfolio management, based in Toronto. He was previously in the structured and bespoke solutions team at Texel in London, having worked in balance sheet optimisation and credit risk roles at Qbera Capital, HSBC, Lloyds, Morgan Stanley, Deutsche Bank, RBS and JPMorgan before that.