According to a report from the Wall Street Journal,the European Union's markets watchdog said it found flaws in the way the big three credit ratings firms rank government bonds and warned that it may take "enforcement action" against them that could include fines or withdrawal of licenses.
The three U.S.-based rating firms—Fitch Ratings, Moody's Investors Service and Standard & Poor's—have faced an onslaught of criticism and new regulation in Europe in recent years after some euro-zone officials said the timing of their decisions to downgrade the region's sovereigns had aggravated its financial crisis.
In a report published Monday, the Paris-based European Securities and Markets Authority, or ESMA, warned of a series of "actual failings or potential risks" that it said might harm the independence and accuracy of the three big agencies.
It also pointed to failings in the way the agencies handled confidential information on sovereign ratings, including the disclosure of imminent rating decisions to third parties, and highlighted "significant and frequent delays" in the publication of ratings.
