Egan-Jones Ratings Co. was barred from grading government debt and asset-backed securities for 18 months after settling charges it made material misstatements to the
Egan-Jones misled the regulator by asserting it had been ranking the two asset classes since 1995 when registering for so-called Nationally Recognized Statistical Rating Organization status, the SEC said recently in a statement. In fact, the Haverford, Pa.-based company started rating the debt in 2008, the year it applied for the designation.
The SEC evaluates and decides which companies can issue NRSRO grades, which allows investors to meet regulatory requirements. The financial watchdog began using ratings in its rules in 1975, specifying that the only companies whose rankings could be used were Standard & Poor’s, Moody’s Investors Service and Fitch Ratings. Ten companies now carry the designation.
“Egan Jones is very pleased to announce that the firm has settled its issues with the SEC on mutually agreeable terms,” Bill Hassiepen, co-head of the ratings desk, said in an e-mailed statement. “Egan Jones remains an NRSRO for all of its corporate, bank/finance and insurance ratings, and will re-apply for NRSRO designation in relatively short order.”
Egan-Jones, which was first accused of making the misrepresentations last April, must conduct a self-review and implement policies that correct issues identified in the order, according to the statement. In its July 2008 application, Egan-Jones said it had 150 outstanding ABS issuer ratings and 50 government grades.
