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“Shadow rating” case: Allen & Overy obtains the withdrawal of the fine imposed on Skandinaviska Enskilda Banken AB (SEB)


18 March 2019

On 13 March 2019, the Board of Appeal of the European Supervisory Authorities (EBA, EIOPA and ESMA) ruled on the appeals filed by four banks against four decisions issued by the European Securities and Markets Authority’s Board of Supervisors in July 2018 on the grounds of the Credit Rating Agencies Regulation (the Regulation).

After acknowledging the complex nature of the case and the interpretational difficulties surrounding the contentious provisions of the Regulation, in particular the exemption of investment research and recommendations in Article 3(2), the Board of Appeal upheld the Board of Supervisors’ interpretation whereby the appellant banks issued credit ratings within their credit research reports without being registered as a credit rating agency and thereby committed the infringement set out at point 54 of Section I of Annex III of Regulation.
However, taking into consideration many of the written and oral arguments raised by Allen & Overy on behalf of SEB, alongside the other appellant banks’ counsel, the Board of Appeal overruled the Board of Supervisors’ decision as regards negligence, finding that in light in particular of the longstanding “shadow rating” practice in the Nordic region and the lack of clear relevant regulatory guidance, the appellant banks did not infringe the Regulation negligently and no fine can therefore be imposed on them.
The Board of Appeal has accordingly remitted the case to the Board of Supervisors to adopt an amended decision based on its findings. In the meantime, an appeal may be filed to the Court of Justice of the European Union, which would have unlimited jurisdiction over the case.
Paris counsel Dan Benguigui represented Skandinaviska Enskilda Banken AB (SEB) in this appeal and was assisted by Rebecca Harris, associate in the Litigation team.
The White-Collar crime and Regulatory enforcement team at Allen & Overy will be closely monitoring this major development in the application of the Regulation and its impact on investment and credit research activities.
The decision is available on the websites of the three European Supervisory Authorities, including ESMA’s:
The Paris Litigation team is composed of five Partners (Denis Chemla, Hippolyte Marquetty, Erwan Poisson, Marie Stoyanov and Christopher Mainwaring-Taylor), one Counsel, Dan Benguigui and 17 associates. Besides its recognised expertise in financial litigation and international arbitration, the team has developed a White Collar Crime practice, which has quickly become a staple of the French market. The team assists clients on topics such as anti-corruption, money laundering, tax evasion, deceptive marketing practices, fraud, press, labour and corporate law. The team also advises and represents clients of the firm in regulatory contentious matters, including during inspections and investigations, and before the enforcement committees of the French banking (the ACPR) and financial (AMF) authorities, or EU authorities and jurisdictions.
For further information, please contact Valérie Brisac,, on +33 (0)14006 5441.



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