Bloomberg to pay $5M to SEC over ‘misleading’ disclosures News
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Bloomberg to pay $5M to SEC over ‘misleading’ disclosures

The US Securities and Exchange Commission (SEC) Monday settled with Bloomberg Finance L.P. over claims that the company made misleading disclosures relating to its paid subscription service BVAL, which provides daily pricing for over 2.5 million securities to more than 1,300 financial institution customers.

Bloomberg agreed to pay the SEC a $5 million penalty and cease and desist from future violations, without admitting or denying the SEC’s findings. The SEC’s findings also revealed that Bloomberg violated Section 17(a)(2) of the Securities Act, which denotes liability for fraudulent sales of securities.

The SEC’s order detailed that Bloomberg’s BVAL service, between 2016 and October 2022, provided “a very small fraction of total reported valuations” which were based on “uncorroborated single broker quotes[,]” and Bloomberg customers were not informed of Bloomberg’s use of the Evaluator Input Tool (EIT). The SEC found Bloomberg’s failure to disclose that BVAL prices could “be based on a single data input” to be misleading. Further, while “there is no evidence that BVAL’s prices were erroneous or not reflective of the market[,]” the SEC’s overall findings concluded that Bloomberg’s disclosures of its methodologies were “materially misleading.”

The SEC’s Chief of the Division of Enforcement’s Complex Financial Instruments Unit Osman Nawaz stated that the SEC “will hold service providers, such as Bloomberg, accountable for misrepresentations that impact investors.” Additionally, Nawaz stated:

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.

Bloomberg’s SEC fine follows the SEC’s crack down on other financial organizations, crypto companies, and their employees’ conduct, including Nexo CapitalFTX, Celsius, Genesis, Gemini, and CoinDeal.