The Securities and Exchange Commission (SEC) has charged credit rating agency Egan-Jones Ratings Co. (EJR) and its owner and president Sean Egan for material misrepresentations and omissions in their July 2008 application to register as a Nationally Recognized Statistical Rating Organization (NRSRO) for ABS and government securities issuers.
EJR and Egan also are charged with material misrepresentations in other submissions submitted to the SEC and violations of record-keeping and conflict-of-interest provisions governing NRSROs. The SEC issued an order instituting proceedings where the SEC’s division of enforcement alleges that EJR – based in Haverford, Pa. – submitted an application to register as an NRSRO for issuers of ABS and government securities in July 2008. Before this, EJR had registered with the SEC in 2007 as an NRSRO for financial institutions, insurance firms, and corporate issuers. The SEC division alleges that in its 2008 application, EJR said falsely that as of its application date, it had 150 outstanding ABS issuer ratings and 50 outstanding government issuer ratings. EJR also falsely claimed in the same application that it had been issuing credit ratings in the ABS and government areas as a credit rating agency on a continuous basis since 1995.