The US Securities and Exchange Commission (SEC ) has fined Bloomberg LP
$5 million for allegedly failing to make certain disclosures to customers with
regards to BVAL, its paid subscription product which provides daily price
valuations for fixed-income securities. The securities regulator disclosed the fine in a statement released on Monday.
According to the SEC, between at least 2016 and October
last year, the data and media company did not inform its BVAL subscribers
that its valuations for certain fixed-income securities could be based on a
single data input, such as a broker quote. SEC said this is problematic because
such a source does not align with the methodologies the company had previously disclosed to
its customers.
SEC further explained that Bloomberg did not make the disclosure despite
knowing that clients such as mutual funds may depend on the BVAL price valuations when calculating the value of their assets. They are also likely to value their
investments in government, supranational, agency and corporate and municipal
bonds as well as securitized products using BVAL’s data, the regulator added.
Watch this recent FMLS22 session on how global dynamics and digitization are influencing market data.
According to the SEC, the purposes for which Bloomberg’s BVAL are deployed means that the paid subscription service’s prices can influence the prices at which securities
are offered or traded. As a result of this “misleading disclosure,” therefore, Bloomberg violated sections 17(a) (2) of the United States Securities Act.
The regulator noted that Bloomberg has agreed to pay the pecuniary fine without admitting or denying its charges. The company has also pledged to avoid future violations of the Act. In addition, Bloomberg voluntarily took remedial efforts to improve its BVAL service, the regulator said.
Osman Nawaz, Chief of the SEC’s Division of Enforcement’s Complex Financial Instruments Unit, explained that because Bloomberg and other pricing services providers play a critical role in the fixed-income markets, they must always provide accurate information about their valuation process to their customers.
The US Securities and Exchange Commission (SEC ) has fined Bloomberg LP
$5 million for allegedly failing to make certain disclosures to customers with
regards to BVAL, its paid subscription product which provides daily price
valuations for fixed-income securities. The securities regulator disclosed the fine in a statement released on Monday.
According to the SEC, between at least 2016 and October
last year, the data and media company did not inform its BVAL subscribers
that its valuations for certain fixed-income securities could be based on a
single data input, such as a broker quote. SEC said this is problematic because
such a source does not align with the methodologies the company had previously disclosed to
its customers.
SEC further explained that Bloomberg did not make the disclosure despite
knowing that clients such as mutual funds may depend on the BVAL price valuations when calculating the value of their assets. They are also likely to value their
investments in government, supranational, agency and corporate and municipal
bonds as well as securitized products using BVAL’s data, the regulator added.
Watch this recent FMLS22 session on how global dynamics and digitization are influencing market data.
According to the SEC, the purposes for which Bloomberg’s BVAL are deployed means that the paid subscription service’s prices can influence the prices at which securities
are offered or traded. As a result of this “misleading disclosure,” therefore, Bloomberg violated sections 17(a) (2) of the United States Securities Act.
The regulator noted that Bloomberg has agreed to pay the pecuniary fine without admitting or denying its charges. The company has also pledged to avoid future violations of the Act. In addition, Bloomberg voluntarily took remedial efforts to improve its BVAL service, the regulator said.
Osman Nawaz, Chief of the SEC’s Division of Enforcement’s Complex Financial Instruments Unit, explained that because Bloomberg and other pricing services providers play a critical role in the fixed-income markets, they must always provide accurate information about their valuation process to their customers.