S&P’s `erroneous’ downgrade of France triggers calls for tough regulation
12 Nov 2011
The erroneous announcement by Standard & Poor's (S&P), downgrading France's triple-A credit rating, which was caused by a technical error, has further strengthened the hands of those seeking tighter regulation of rating agencies.
The announcement, sent as an email alert to a few subscribers by S&P, added turmoil in jittery European bond markets, where speculation of a possible downgrade of France's ratings have been doing the rounds.
Francois Baroin, the French finance minister, described S&P's error as shocking and demanded regulators probe the cause and consequences.
The country's financial market watchdog, Autorité des Marchés Financiers (AMF), launched an immediate probe into the fiasco.
America's Securities and Exchange Commission (SEC) is also expected to investigate the 'downgrade.' S&P said that it is cooperating with all the relevant authorities and providing the full background into the episode.
According to the agency, its system mistakenly interpreted a change in France's bank-risk ranking – which was changed to 'not available' for testing purposes – as a 'downgrade,' and triggered a message to a limited number of subscribers who had signed up to receive e-mail alerts.
''The erroneous message regarding a downgrade resulted from a technical error wholly unrelated to the sovereign rating on France,'' said the agency.
