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[HONG KONG] Ratings agency Moody's Corp told a Hong Kong tribunal on Friday a report on Chinese companies had some errors, but it stood by the material outcome of the study, which raised concerns about corporate governance at 49 Chinese companies.
Moody's said the errors, however, were not serious enough to warrant a HK$6 million (S$1.1 million) fine by Hong Kong's Securities and Futures Commission (SFC), which said the mistakes were a serious breach of due diligence standards.
That fine was part of a larger US$3 million penalty the regulator imposed on Moody's. The ratings agency is appealing the ruling.
Moody's said there were 12 input and mathematical errors in relation to the methodology of its "red flags" report, but its counsel, Adrian Huggins, told the tribunal "those errors did not render the whole red flags framework fundamentally flawed."
"Errors did not have a material impact on overall accuracy of the report," Mr Huggins said at the SFC's appeals tribunal in Hong Kong.
The SFC fine is the first disciplinary action taken against a credit rating agency since their activities became directly regulated by the SFC in June 2011. It could have major implications for the types of services credit rating firms are able to offer in the financial centre.