Well-known Chinese news site Sina recently reported that, for the last two and a half years now, European Union regulators have been investigating Dagong Europe, a branch of the Chinese credit rating company Dagong International. The EU discovered that the company’s internal inspection and balancing system has defects. The confidential investigation that the European Securities and Markets Authority (ESMA) has been conducting is still on-going. ESMA was concerned that the company did not fully comply with the EU regulations on credit rating agencies. One of the conditions under which Dagong was issued its operating license was to avoid a conflict of interest with the licensee’s customers. The investigation was triggered when a fund named Mandarin Capital Partners, who was one of the initial investors in Dagong Europe, filed a complaint. Dagong Europe is the first Asian competitor in Europe that the top three American rating agencies (Moody’s, Fitch, and Standard & Poor’s) have had to face.
Source: Sina, December 23, 2015