Egan-Jones Rating Company which rates the credit worthiness of thousands of US investment companies finds itself in trouble as the US Securities and Exchange Commission (SEC) recently barred them from issuing in any ratings. Egan-Jones rose the ladder of success quickly as it captured the Nationally Recognized Statistical Rating Organization (NRSRO) in 2007, a mere 12 years after it was founded.
However, though it retains this status for its corporate users, the NRSRO is currently banned from rating asset backed securities and government securities – a ban that is to be effective for the next 18 months. Also it is the first company of its kind to face such a ban. The reason cited by the SEC is that the company had failed to maintain proper records and had made a wrong claim that it was unaware of the investments made by its subscribers. The SEC further accused the company that when a clash of interest rose between two analysts, it had failed to take any measures against it.
Egan-Jones on the other hand is giving the silent treatment by neither accepting nor denying the allegations brought up against it. However, the company has decided to make a move of settlement by paying the penalty of $30,000 and also by agreeing to remain blocked from his NRSRO status for the next 18 months.
Worried if the company you are investing with is transparent in its dealings or not? Mail us at: CorpInfo@Atlanticus.comor Investors@Atlanticus.com.
