SEC fines Bloomberg $5 million for misleading disclosure on fixed income securities

The Securities and Exchange Commission has slapped a $5 million fine on Bloomberg Finance L.P. for allegedly misleading disclosures regarding BVAL, its paid subscription service which provides daily price valuations for fixed-income securities to financial services entities.

According to the US regulator between 2016 and October 2022, Bloomberg failed to inform its BVAL customers that the valuations for certain fixed-income securities could be based on a single data input, such as a broker quote. The SEC explained that this did not adhere to methodologies the data and media company had previously disclosed.

Furthermore, SEC alleges that Bloomberg was aware that certain customers such as mutual funds may use the BVAL price valuations when calculating the valuation of their assets. The regulator added that they are also likely to use the BVAL’s data to determine the value of  their investments in government, supranational, agency and corporate, municipal bonds as well as securitized products.

SEC

Osman Nawaz, Chief of the Division of Enforcement’s Complex Financial Instruments Unit, said:

Bloomberg has assumed a critical role as a pricing service to participants in the fixed-income markets and it is incumbent on Bloomberg, as well as on other pricing services, to provide accurate information to their customers about their valuation processes. This matter underscores that we will hold service providers, such as Bloomberg, accountable for misrepresentations that impact investors.

The official announcement noted that Bloomberg has agreed to cease and desist from future violations and to pay the $5 million fine without admitting or denying the charges. Additionally, the regulator stated that Bloomberg voluntarily took remedial actions to improve its BVAL service.

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