In the Matter of Egan-Jones Ratings Company and Sean Egan, Admin Proc. No. 3-14856. On January 22, 2013, the SEC announced that Egan-Jones Ratings Company (“EJR”) and its president Sean Egan have agreed to settle charges that they made misleading statements when registering with the SEC to become a Nationally Recognized Statistical Rating Organization (“NRSRO”) for asset-backed securities and government securities. Egan and his firm were charged by the SEC for misstating on EJR’s application to the SEC the number of outstanding asset-backed securities (“ABS”) issuer ratings and outstanding government issuer ratings it had issued. According to the SEC, EJR had not issued any ABS or government issuer ratings, and as a result, EJR did not meet the requirements for registration as a NRSRO. EJR also violated recordkeeping and conflict-of-interest provisions governing NRSROs. Without admitting or denying the charges, EJR and Egan to an SEC order that finds EJR made false statements in its registration application, that EJR violated conflict-of-interest provisions, and that Egan caused EJR’s violations. Under the settlement, EJR and Egan agreed to be barred for at least 18 months from rating asset-backed and government securities issuers as an NRSRO. EJR and Egan also agreed to correct the deficiencies found by SEC examiners in 2012, and submit a report – signed by Egan under penalty of perjury — detailing steps the firm has taken. EJR and Egan further agreed to certain undertakings, including conducting a comprehensive self-review and implementing policies, procedures, practices, and internal controls that correct issues identified in the SEC’s order and in the 2012 examination of EJR conducted by the SEC’s Office of Credit Ratings. Finally, the SEC order requires them to cease and desist from committing or causing future violations.
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