Bloomberg Finance Fined $5M by SEC for Disclosure Violations on Fixed-Income Prices

Bloomberg Finance LP was fined $5 million by the SEC to settle civil charges that the company misled customers about how it calculated the prices of certain securities.

Source: CNBC | Published on January 24, 2023

SEC

Bloomberg Finance LP was fined $5 million by the Securities and Exchange Commission on Monday to settle civil charges that the company misled customers about how it calculated the prices of certain securities.

The SEC found that from at least 2016 to October 2022, the company failed to disclose the methodologies it used to value certain fixed-income securities to users of its paid subscription service, BVAL.

According to the agency, some of the prices were based on a single data point, such as a single broker quote, and did not adhere to the methodologies it previously stated it used to calculate valuations. According to the SEC, the action could have affected the price at which securities are offered or traded on the platform.

Mike Bloomberg, a former New York mayor and one-time presidential candidate, owns Bloomberg LP, a data and media company.

Bloomberg did not respond to a request for comment on the settlement. According to a spokesperson, the SEC’s cease and desist order states that “there is no evidence that BVAL’s prices were erroneous or not reflective of the market” during the relevant period. However, the agency discovered instances where valuations were not derived using publicly available methodologies.

“Bloomberg has assumed a critical role as a pricing service to participants in the fixed-income markets,” said Osman Nawaz, chief of the SEC’s division of enforcement’s complex financial instruments unit. “This case demonstrates that we will hold service providers, such as Bloomberg, accountable for misleading investors.”

According to the SEC, Bloomberg’s customers, including mutual fund companies, used its prices to calculate the value of their own holdings. According to the SEC, the disclosure issue impacted the prices of some government bonds, agency securities, corporate bonds, municipal bonds, and securitized products.