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Ethics Metrics LLC

Service Providers Framework 2019

You are in Active Ownership Services » Active ownership services

Active ownership services

AOS 01. Engagement and/or voting offerings

01.1. Indicate which active ownership services are part of your business offerings. Tick all that apply.

01.2. Indicate which markets your organisation covers.

01.3. Additional information [OPTIONAL]


AOS 02. Acquiring ESG data and information

02.1. Indicate where you acquire your ESG data and information.

02.2. Describe how this information is used in your product/service offerings.

          The Ethics Metrics model captures and integrates publicly disclosed financial information and and disclosures from federal regulators. The model then maps, measures and rates financial performance against (1) federal compliance laws and regulations for banks and, if relevant, for publicly-traded firms in the U.S. and (2) historical cases for formal enforcement actions by the Federal Reserve and fraud by the Securities and Exchange Commission and the Department of Justice.

02.3. Additional information [OPTIONAL]


AOS 03. Identifying emerging ESG issues

03.1. Indicate whether you identify emerging ESG issues.

03.2. Describe how you identify emerging ESG issues.

          Research by Ethics Metrics, dating back 40 years on financial crises in the U.S. banking system, identifies a core violation of the OECD Corporate Governance Principles. Federal bank regulators and many large Bank or Depository Institution Holding Companies (DIHCs) are not disclosing formal supervisory enforcement actions. This intentionally conceals material information from investors thus undermining the integrity of the global financial markets for large U.S. DIHCs and their global investors. Ethics Metrics' publishes its research through public comments to the Securities and Exchange Commission on Bank Holding Company disclosure issues. See the papers submitted to the SEC at this URL:

03.3. Describe some of the emerging ESG issues you have identified in this process.

          Federal bank regulators and many large U.S. DIHCs are intentionally classifying material information as confidential supervisory information while this same information is disclosed by federal bank regulators and small DIHCs thus creating a bifurcated market or unlevel playing field with information asymmetries or superior information. Disclosure of this information results in an average 39% default rate, within an year of disclosure, for small DIHCs. Their subsequent mergers with large DIHCs, many of whom intentionally conceal this same information, have created an inefficient market for large DIHCs that is characterized by artificially low default rates and risk profiles and corresponding inflated equity values and underpriced bond and swap values.

03.4. Additional information [OPTIONAL]