Bloomberg Pays $5 Million in SEC Penalties

The SEC charged Bloomberg Finance LP with misleading statements about its paid membership service, Bloomberg Valuation Service (BVAL), which provides financial services organizations with daily price values for fixed-income assets.

The US watchdog discovered that, between about 2016 and October 2022, Bloomberg neglected to disclose to its BVAL clients that the values for some fixed-income instruments might be based on a single data input, such as a broker quotation, that did not correspond to previously stated procedures.

Bloomberg was allegedly aware that its clients, including mutual funds, may utilize BVAL prices to establish fund asset values, such as appraising fund assets in government, supranational, agency, corporate bonds, municipal bonds, and securitized goods.

As a result, BVAL prices may influence the price at which securities are offered or sold.

“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 other pricing services, to provide accurate information to their customers about their valuation processes,” said Osman Nawaz, chief enforcement officer of the SEC's complex financial instruments unit.

“This case demonstrates that we will hold service providers, such as Bloomberg, liable for misleading investors.”

Bloomberg paid the punishment without confirming or contesting the conclusions of the investigation. It also pledged to refrain from other infractions in the future.

The SEC determined in its decision notes that Bloomberg voluntarily engaged in corrective actions to strengthen its BVAL line of business.

About US SEC

The Securities and Exchange Commission (SEC) of the United States is a government body in charge of implementing federal securities laws and regulating the securities sector. The SEC's objective is to protect investors, keep markets fair, orderly, and efficient, and promote capital creation. The SEC has the jurisdiction to register, regulate, and supervise brokerage firms, investment businesses, and investment advisors, as well as to develop and enforce securities industry laws and regulations. Furthermore, the SEC investigates and takes enforcement action against persons and businesses that violate securities laws.

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