ESMA Slaps This Fintech with €420K Fine for Name-Dropping Violations

The European Securities and Markets Authority (ESMA) has imposed a €420,000 fine on Modefinance for improperly suggesting the regulator had endorsed its credit rating activities, the EU financial markets watchdog announced Monday.

ESMA Fines Modefinance €420,000 for Misleading Statements

The Italian credit rating agency published statements on its websites between September 2018 and October 2021 claiming ESMA had “certified” or “validated” models used in its scoring and credit rating activities, according to the regulator's findings.

“Modefinance used ESMA's name to incorrectly suggest ESMA's endorsement of its credit rating activities,” said Verena Ross, ESMA Chairwoman. “This could mislead investors and could have an impact on the proper functioning of EU financial markets.”

ESMA determined the breach of the Credit Rating Agencies Regulation resulted from negligence by Modefinance. The regulator considered both aggravating and mitigating factors in calculating the fine amount and issued a public notice alongside the monetary penalty.

The Credit Rating Agencies Regulation explicitly prohibits firms from using ESMA's name in ways that indicate or suggest endorsement or approval of credit ratings or related activities.

Recent Regulatory Actions

ESMA released detailed guidelines in February 2025 that establish knowledge and competency requirements for staff at crypto-asset service providers, representing an important development in the professionalization of the crypto industry under the MiCA regulatory framework. The consultation document outlines minimum qualification standards and ongoing professional development obligations for employees who provide crypto-asset information and advice to clients.

In a separate initiative, ESMA has developed a strategy to transition from the current T+2 settlement cycle to T+1 by 2027, effectively reducing the settlement timeframe by 50%. This planned change aims to boost market efficiency, mitigate risks, and bring EU practices in line with global standards, ultimately enhancing the efficiency of post-trade processes across European markets.

According to ESMA's annual analysis examining data from 386 firms across 30 EU and EEA jurisdictions, Cyprus hosts 20% of all firms providing cross-border investment services in the region. This concentration substantially exceeds other financial centers, with Luxembourg and Germany following at 15% and 14% respectively. The distribution of retail clients, however, shows a different pattern, with Germany leading at approximately 1.63 million retail clients receiving cross-border investment services, representing about 20% of the 8 million total clients identified in the study.