SEC fines Bloomberg $5 million for disclosure violations on fixed-income prices

KEY POINTS

• Bloomberg Finance LP, founded by former New York mayor and once-presidential candidate Michael Bloomberg, paid $5 million to settle civil charges over misleading disclosures.
• The company failed to disclose methodologies used to value certain fixed-income securities to users of BVAL, its paid subscription service.
• The company neither admitted or denied the SEC's charges.

Former mayor of New York Michael Bloomberg speaks during a meeting with Earthshot prize winners and finalists at the Glasgow Science Center during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021.

Alastair Grant | Reuters

The Securities and Exchange Commission fined Bloomberg Finance LP $5 million to settle civil charges accusing the company of misleading customers on how it calculated the prices of certain securities, the agency said Monday.

The SEC found that the company failed to disclose the methodologies it used to value certain fixed-income securities to users of its paid subscription service, BVAL, from at least 2016 through October 2022.

Some of the prices were based on just one data point, like a single broker quote, the agency said, which didn't follow the methodologies it previously said it used to calculate valuations. The action could have affected the price at which securities are offered or traded on the platform, the SEC said.

Former New York mayor and one-time presidential candidate Mike Bloomberg owns the parent company Bloomberg LP, a data and media company.

Bloomberg declined to comment on the settlement. A spokesperson directed CNBC to language from the SEC's cease and desist order which states "there is no evidence that BVAL's prices were erroneous or not reflective of the market" during the relevant period. But, the agency found instances where valuations were not derived according to publicly available methodologies.

"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," said Osman Nawaz, chief of the SEC's division of enforcement's complex financial instruments unit. "This matter underscores that we will hold service providers, such as Bloomberg, accountable for misrepresentations that impact investors."

The SEC said Bloomberg's customers, including mutual fund companies, used its prices to calculate valuations of their own holdings. The disclosure issue affected the prices of some government bonds, agency securities, corporate bonds, municipal bonds as well as securitized products, the SEC said.