Bloomberg Finance misled customers about how it valued fixed-income securities, according to the Securities and Exchange Commission.
The SEC alleged that from 2016 through last October, Bloomberg’s BVAL, which provides financial services company with daily price valuations of fixed-income securities, failed to disclose that valuations could be based on a single data input, such as a broker quote, rather than other methodologies it presented. Bloomberg agreed to pay $5 million to settle charges without admitting or denying the charges.
Some customers such as mutual fund providers use BVAL prices to determine the value of bonds held in their fund, the SEC stated. The prices on BVAL can therefore have an impact on the price at which securities are offered or traded.
“Bloomberg has assumed a critical role as a pricing service to participants in the fixed-income markets and it is incumbent on Bloomberg, as well as on other pricing services, to provide accurate information to their customers about their valuation processes,” Osman Nawaz, chief of the SEC enforcement division’s complex financial instruments unit, said in a statement. “This matter underscores that we will hold service providers, such as Bloomberg, accountable for misrepresentations that impact investors.”
The SEC noted that Bloomberg has engaged in remedial efforts to improve BVAL.
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