SEBI revokes Brickwork ratings' license owing to multiple lapses

7 Oct 2022 , 10:51 AM

In what is likely the country’s first such punitive regulatory move, the capital markets regulator terminated Brickwork Ratings India’s license on Thursday for “failure to apply necessary skill, care, and diligence while fulfilling its obligations as a credit rating agency.”

The Securities and Exchange Board of India (Sebi) has directed that the credit rating agency cease operations within six months. Brickwork has also been forbidden from taking on new clients as of the date of the order, according to Sebi.

Brickwork Ratings was given a show-cause notice by Sebi in November 2020, with the charges leveled against it being failing to follow the required rating process and exercising due diligence while issuing ratings.

Approximately 9,000 Brickwork Ratings ratings are now live and being monitored. These include bank loan ratings as well as ratings of securities and instruments that may be listed.

Sebi had performed three Brickwork Ratings inspections.

The regulator also claimed that the agency failed to maintain sufficient records to back its ratings and delayed transmission of information regarding rating monitoring.

Brickwork Ratings also failed to meet timescales specified in its internal operational manual in more than 75% of the cases, according to Sebi’s assessment. It also did not address the problem of a conflict of interest caused by a member of the rating committee holding business development roles.

The regulator also claimed that the rating agency failed to provide accurate disclosures about several issuers in its press releases.

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