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SEC Considers Case Against Egan-Jones Rating Agency

An outspoken critic of major credit rating agencies ends up in the dock!  It is lesson for rating agency start-ups who thought to make hay when major rating agencies found themselves in the dock following the sub-prime credit crisis.  The proverb, “Don’t throw bricks when you live in a glass house”, holds also true in this case.

According to the SEC notified Mr Egan about the possible charges through a Wells notice several months ago.  People familiar with the case said the SEC is seeking to ban Mr Egan and the firm from rating asset-backed securities and sovereign debt for two years.  Mr Egan runs one of the only credit rating agencies where investors, not borrowers, pay for ratings.  He has been an outspoken critic of rating groups Moody’s and Standard & Poor’s , saying they face too much of a conflict of interest because groups seeking ratings also pay for them.

Source:  Financial Times

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