Five European subsidiaries of Moody’s Corp. have been fined a total of €3.7 million (U.S. $4.4 million) for violating conflict-of-interest rules.

The European Securities and Markets Authority (ESMA)—which includes credit agencies as part of its regulatory mandate—announced the fines in a press release Tuesday.

The bulk of the penalty (approximately €2.7 million, or U.S. $3.2 million) was levied against Moody’s UK for the period covering 2013-17. In its decision, ESMA said the affiliate maintained credit ratings on nine entities owned in part by Berkshire Hathaway, which owns more than 10 percent of Moody’s. ESMA conflict-of-interest rules prevent a credit ratings company from issuing credit ratings on entities which are partially owned by a company that owns more than 10 percent of the credit rating company or has a member on the company’s board.

The companies rated included several subsidiaries of Northern Powergrid (Yorkshire) Ltd., a U.K.-based utility, and Munich Re, a German insurance company. Berkshire Hathaway owned more than 10 percent in both companies or had a member on the board.

ESMA ruled that a 2015 credit rating Moody’s issued on Northern Powergrid violated its conflict-of-interest rules.

Moody’s UK also failed to disclose conflicts of interest related to ratings it issued on a lower, 5 percent ownership threshold. ESMA stated it found lack of disclosure in 206 instances for 65 rated entities.

ESMA found Moody’s UK negligent for failing to follow conflict-of-interest regulations and having inadequate internal policies and procedures to manage shareholder conflicts of interest. It also cited the firm for including an incorrect exception to the ban.

The other subsidiaries fined included Moody’s Germany (€340,000, or U.S. $400,000); Moody’s France (€280,000, or U.S. $330,000); and Moody’s Italy and Spain (each fined €174,000, or U.S. $205,000).

Compliance takeaway: Moody’s had a “lack of appropriate and effective organisational and administrative arrangements, with significant shortcomings in the data source used to identify conflicts,” ESMA said. The company also had a “lack of sound administrative, accounting procedures and internal control mechanisms,” the regulator added.

ESMA reduced the fines it had considered levying against Moody’s because the company worked with regulators to install policies and procedures to prevent similar conflicts of interest from occurring in the future.

Moody’s response: A Moody’s spokesman said in a prepared statement the company (MIS) is “pleased the matter is closed.”

“Although ESMA concluded that MIS failed to comply with certain EU rules regarding shareholder conflicts of interest during the period from 2013 to 2017, importantly, ESMA found that MIS had no intent to infringe the EU regulation and there was no impact on the quality of any ratings,” the spokesman said. “ESMA also recognized the voluntary steps we have taken to prevent similar infringements in the future. We are committed to the integrity and independence of our ratings and to complying with all regulatory requirements that apply to our business.”

Editor’s note: This story has been updated to clarify that ESMA ruled a 2015 credit rating Moody’s issued on Northern Powergrid in particular violated conflict-of-interest rules.