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SEC Tells Ratings Firm|to Cease & Desist

WASHINGTON (CN) - The SEC on Tuesday charged Egan-Jones Ratings Company and its owner Sean Egan with making material misrepresentations and omissions in their July 2008 application to register as a Nationally Recognized Statistical Rating Organization for issuers of asset-backed securities and government securities.

In its cease-and-desist order, the SEC also charged Haverford, Pa.-based EJR and Egan with making material misrepresentations in other submissions to the SEC and violating record-keeping and conflict-of-interest provisions governing NRSROs.

The SEC said in a statement: "The SEC's Division of Enforcement alleges that in its 2008 application, EJR falsely stated that as of the date of the application it had 150 outstanding ABS issuer ratings and 50 outstanding government issuer ratings. EJR further falsely stated in its 2008 application that it had been issuing credit ratings in the ABS and government categories as a credit rating agency on a continuous basis since 1995. In fact, at the time of its July 2008 application, EJR had not issued - that is, made available on the Internet or through another readily accessible means - any ABS or government issuer ratings, and therefore did not meet the requirements for registration as an NRSRO in these categories. EJR continued to make material misrepresentations regarding its experience rating asset-backed and government securities in subsequent annual certifications furnished to the SEC."

The SEC ordered Egan and his company to respond to its allegations within 20 days of service.

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