Whistleblowing

Top Credit Ratings from Google’s Search World

Agencies, Whistleblowing

Four US rating agencies give Triple-A credit ratings to a bankrupt bank?

On Friday 22 April 2022, the Amsterdam District Court, at the request of Amsterdam Trade Bank N.V. (ATB) and after hearing the Nederlandsche Bank N.V., declared ATB bankrupt. Declaring the bankruptcy means that a trustee has been appointed to wind up the Trade Bank and to represent the interests of the creditors and savers. The “Directie Financiële Markten” of the Ministry of Finance of the Netherlands informed about this.

If you search for this bank on Google three days later and want to know the credit rating, you will surprisingly find the following search result on Google:

“Ratings are an indicator of Amsterdam Trade Bank’s creditworthiness and security. … How secure is the Amsterdam Trade Bank?”

What follows is bound to mislead every investor, as Google consistently lists AAA (Triple A) credit ratings from all the leading US rating agencies.

Google Suche von Montag, den 25. April 2022, 14 Uhr

Google reportedly gets this information from a website in German with the domain “Kritische Anleger”, in English “Critical Investors”:

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If you continue to search for this allegedly triple-A-rated bank, encouraged by the AAA credit ratings reported by Google, you will find what you are looking for at the respected German foundation Stiftung Warentest. A message from Stiftung Warentest contributes to the confusion: “Amsterdam Trade is now called FIBR-Bank” (“Amsterdam Trade heißt jetzt FIBR-Bank“).

“Customers need to register again with FIBR”

FIBR is only a trading name of Amsterdam Trade Bank N.V. The risk of doing business with this bank, in particular giving money in the form of deposits, remains unaffected by this renaming. If you go to the FIBR website, you will not find any reference to the insolvency that has already occurred, only friendly smiling faces inviting you to deposit savings at this bank.

In fact, on October 23, 2015, the rating agency Moody’s not only downgraded the bank from an already speculative rating deeper to “junk level”, but even withdrew the rating:

Moody’s Investors Service has today downgraded Amsterdam Trade Bank N.V.’s local- and foreign-currency long-term deposit ratings to B2 from Ba3, as well as the bank’s baseline credit assessment (BCA) to caa3 from b2. The adjusted BCA was downgraded to b3 from b1. The outlook on the long-term deposit ratings is negative.

…

Following this rating action, Moody’s will withdraw Amsterdam Trade Bank’s ratings for its own business reasons.

Moody’s Investors Service, October 23, 2015

So the question remains why Google’s search engine shows top credit ratings from the US credit rating agencies for the Russian-run bank in the Netherlands.

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Relatives Are Relative

Agencies, Whistleblowing

The scandal with the Greensill Bank brings back earlier scandals by the same rating agency to mind.

How close can relationships be without being a problem for the rating and for the rating agency? What degree of kinship could influence the independence of judgment?

The story of the fund initiator Interlife Management GmbH seems like a penny dreadful: The company belonged to the father of the business scheme initiator and major shareholder of today’s Scope SE & Co. KGaA. Scope not only gave the first Interlife fund a good rating: A company owned by Scope manager Martin Passenheim took over sales. Ratings with a bitter aftertaste are not a recent phenomenon, but part of the gene code of this rating agency.

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Scope Ratings Game of Corporate Law

Agencies, Authorities, Whistleblowing

The “Scope Group” is a bunch of constant changes under company law.

As a result of the Scope Ratings GmbH billion Euro scandal about Greensill Bank in Bermen, which was rated as “investment grade” for the first time in 2019 and is now insolvent, the precise activities of this local rating agency in Berlin have gained public attention. Therefore, the background to the recent Berlin takeover of Euler Hermes Rating GmbH (EHRG) is being researched.

deutsch

The world-famous brand name “Euler Hermes” was not acquired by Scope. Even back then, when Scope took over FERI EuroRating Services AG, a credit rating agency registered by the European Securities and Markets Authority (ESMA) and headquartered in Bad Homburg, on August 1, 2016, Scope did not care about continuing the good name of the acquired credit rating agency.

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References

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Whistleblowing Is Getting Popular

Read, Whistleblowing

Whistleblowers, i.e. mostly anonymous tipsters who report irregularities to supervised companies, dubious providers or market practices, have developed into an important source of information for the Austrian Financial Market Authority (FMA).

In 2020, 278 reports were submitted via the whistleblower platform on the FMA website, a new record since the system was introduced in 2014, and an increase of 57% in the past five years alone. Around nine out of ten reports prove to be relevant for supervision. Of the 245 reports that actually affected the FMA’s area of ​​responsibility, around half related to investment fraud (120) and unauthorized business operations (9), i.e. the provision of financial services requiring a license without the required authorization. Almost a third (77 reports) suspected misconduct at banks, only four concerned insurance companies and pension funds. 19 related to the securities business, 15 related to suspected money laundering.

“Our web-based whistleblower platform guarantees whistleblowers technically absolute anonymity. The information is encrypted cryptographically, so it is not possible for us or for the law enforcement authorities to technically identify the informant, “said the FMA Board of Directors, Helmut Ettl and Eduard Müller:” This creates trust and security, and is one of the main reasons why this information channel is becoming more and more popular. ”At the same time, an anonymized, equally secured mailbox enables communication between the authorities and the whistleblower, if they allow it.”

“Our whistleblower platform is such an important – often preventive – instrument in the fight against investment fraud and dubious market practices. Abuses can often be recognized early, and damage can be limited or completely prevented. It makes a valuable contribution to protecting consumers, investors and creditors,” wrote Ettl and Müller.

Two thirds of the indications of investment fraud already concern offers in connection with crypto assets and so-called virtual currencies, with sales being carried out via dubious or criminal online trading platforms on the Internet, and advertising is often via social media such as Facebook, WhatsApp, TikTok or Telegram. In addition to the distribution of fraudulent crypto assets, the criminal trade in virtual currencies continues to increase. On the dubious trading platforms are in particular financial contracts for differences (CFDs), foreign currency trading (FOREX) or binary options as well as supposedly automated trading with such alleged investment products.

The offer of binary options to small investors is prohibited in the EU, that of CFDs is severely restricted by regulations. A third of the reports of investment fraud related to fraudulent offers with traditional investment products such as stocks or gold as well as various forms of advance fraud.

Results

Whistleblower notices led to seven investor warnings, 42 reports to the public prosecutor’s office and a large number of official proceedings by the FMA as well as criminal convictions in 2020, reports FMA.