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SEC Emerges From Carbonite Deep Freeze, Sues Egan-Jones

Tyler Durden's picture


Just in case one is wondering what is a greater crime in America: vaporizing $1.5 billion in client money or having the temerity to downgrade the US (twice), JP Morgan and Morgan Stanley, here is the SEC with the answer:


Somewhere Jon Corzine is cackling like a mad cow.

More on Egan-Jones' inhuman crime (and PDF)

Egan-Jones Ratings Co. and Sean Egan Charged with Making Material Misrepresentations to SEC

Washington, D.C., April 24, 2012 — The Securities and Exchange Commission today announced charges against Egan-Jones Ratings Company (EJR) and its owner and president Sean Egan for material misrepresentations and omissions in the company’s July 2008 application to register as a Nationally Recognized Statistical Rating Organization (NRSRO) for issuers of asset-backed securities (ABS) and government securities. EJR and Egan also are charged with material misrepresentations in other submissions furnished to the SEC and violations of record-keeping and conflict-of-interest provisions governing NRSROs.

The Commission issued an order instituting proceedings in which the SEC’s Division of Enforcement alleges that EJR — a credit rating agency based in Haverford, Pa. — submitted an application to register as an NRSRO for issuers of asset-backed and government securities in July 2008. EJR had previously registered with the SEC in 2007 as an NRSRO for financial institutions, insurance companies, and corporate issuers.

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’s Division of Enforcement also alleges that EJR made other misstatements and omissions in submissions to the SEC by providing inaccurate certifications from clients, failing to disclose that two employees had signed a code of ethics different than the one EJR disclosed, and inaccurately stating that EJR did not know if subscribers were long or short a particular security.

The SEC’s Division of Enforcement further alleges that EJR violated other provisions of Commission rules governing NRSROs. EJR failed to enforce its policies to address conflicts of interest arising from employee ownership of securities, and allowed two analysts to participate in determining credit ratings for issuers whose securities they owned. EJR also failed to make and retain certain required records, including a detailed record of its procedures and methodologies to determine credit ratings and e-mails regarding its determination of credit ratings.

The SEC’s Division of Enforcement alleges that Egan provided inaccurate information that was included in EJR’s applications and annual certifications. He signed the submissions and certified that the information provided in them was “accurate in all significant respects,” when he knew that it was not. Egan also failed to ensure EJR’s compliance with the recordkeeping requirements and conflict-of-interest provisions.

The SEC’s Division of Enforcement alleges that, by the conduct described above, EJR willfully violated Exchange Act Sections 15E(a)(1), 15E(b)(2), 15E(h)(1) and 17(a), and Rules 17g-1(a), 17g-1(b), 17g-1(f), 17g-1(a)(2), 17g-2(a)(6), 17g-2(b)(2), 17g-2(b)(7), and 17g-5(c)(2). The Division of Enforcement further alleges that by the conduct described above, Egan willfully made, or caused EJR to make, material misstatements in its Form NRSRO, and caused or willfully aided, abetted, counseled, commanded, induced or procured EJR’s violations of Sections 15E and 17(a) of the Exchange Act and Rules 17g-1, 17g-2, and 17g-5.

The SEC’s investigation was conducted by Stacy Bogert, Pamela Nolan, Alec Koch, and Yuri Zelinsky. The SEC’s litigation will be led by James Kidney.

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Tue, 04/24/2012 - 14:49 | 2370894 Shizzmoney
Shizzmoney's picture

Well there goes him being on CNBC ever again.

Tue, 04/24/2012 - 14:53 | 2370916 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This is your government, and it's ending one minute at a time.

Tue, 04/24/2012 - 15:00 | 2370970 Michael
Michael's picture

Just slash the SEC budget by 90%. They don't do anything for American civilians anyway.

Tue, 04/24/2012 - 15:03 | 2370993 DormRoom
DormRoom's picture

if you did that the tranny porn industry would collapse.

Tue, 04/24/2012 - 15:43 | 2371185 nope-1004
nope-1004's picture

This gov't has 2 purposes:

1)  Convict those that don't play by the fake rules and refuse to continue the fraud, lies, and cooked bank stats through the MSM.

2)  Invade, destroy, and occupy those countries that don't sell oil in USD.

The US has become a JOKE.  Full of overweight, lazy, "professional" financial innovative cubicle workers, unproductive and illiterate, whose only means to "get ahead" is through credit.  That is a supreme JOKE.  There is no economy anymore.


Tue, 04/24/2012 - 16:02 | 2371284 Bicycle Repairman
Bicycle Repairman's picture



And just to be sure that everyone gets the point, they sue Egan personally.

Any more questions?

Wed, 04/25/2012 - 06:41 | 2372715 trebuchet
trebuchet's picture

This is SHOCKING!!!



Tue, 04/24/2012 - 17:56 | 2371697 Arnold Ziffel
Arnold Ziffel's picture
Watching porn may shut down part of your brain(MSNBC)



Wed, 04/25/2012 - 12:13 | 2373712 trebuchet
trebuchet's picture


Tue, 04/24/2012 - 15:46 | 2371133 Zero Govt
Zero Govt's picture

Egan-Jones gets prosecuted on "material misrepresentations" (trivialities) while the other Credit Ratings Agencies get zippo on national and international mortgage fraud

the SEC are not only defending fraudsters, showing complete contempt for the regulations but they're also bringing the US's biz reputation into disrepute

Tue, 04/24/2012 - 16:01 | 2371279 Bay of Pigs
Bay of Pigs's picture

Fitch upgrades Ford. LOL...

Tue, 04/24/2012 - 16:33 | 2371368 SDRII
SDRII's picture

Must keep subprime credit flowing

Tue, 04/24/2012 - 16:28 | 2371354 NotApplicable
NotApplicable's picture

Good, as there's never been anything reputable about it.

Tue, 04/24/2012 - 15:07 | 2371008 Hedgetard55
Hedgetard55's picture

I wanted to give you a greenie but your font prevents it.

Tue, 04/24/2012 - 15:18 | 2371077 Hippocratic Oaf
Hippocratic Oaf's picture

Amerika...........fuck yea!

Tue, 04/24/2012 - 15:25 | 2371106 Benjamin Glutton
Benjamin Glutton's picture

It was all good when our fascist government was imposing itself on the rest of the planet.


Now that it has turned attention to you and me it's not so funny anymore.


was over in the 60's.

Tue, 04/24/2012 - 17:58 | 2371702 Havana White
Havana White's picture

"Was over in the 60's."  Indeed. Hijacked on November 22, 1963.

Wed, 04/25/2012 - 12:21 | 2373742 chipshot
chipshot's picture





Tue, 04/24/2012 - 15:05 | 2371000 Waffen
Waffen's picture

Who watches the watchers?

For fucks sake, everywhere I look this world is a fucking upside down joke. Everything I was taught as a child about how our country stands for goodness, honesty, truth and justice was a bunch of rotten maggots.

I have been lied to all my life and I am pissed off on epic levels.

Tue, 04/24/2012 - 15:08 | 2371015 machineh
machineh's picture

At least maggots perform a useful service in the food chain.

More than you can say for the SEC.

Tue, 04/24/2012 - 16:28 | 2371352 NewWorldOrange
NewWorldOrange's picture

The extent of regulatory capture in the U.S. would probably shock most people if they really knew. Patrick Byrne and his team of investigators have looked at this for years and its great reading for anyone wanting to see what really goes on with the SEC or with "regulatory" agencies generally:


"As if often the case, it all begins with Jim Cramer."

Tue, 04/24/2012 - 15:11 | 2371029 SheepDog-One
SheepDog-One's picture

I hear you LC Waffen Im totaly ready to be in total dissent and non compliance of it all even if it kills me! Fuck all this! A lab rat wouldnt tollerate it!

Tue, 04/24/2012 - 16:05 | 2371291 The trend is yo...
The trend is your friend's picture

I wish I had the balls to not pay taxes and tell the GOVERNMENT to go fuck themselves for destroying this country

Tue, 04/24/2012 - 16:30 | 2371359 NewWorldOrange
NewWorldOrange's picture

Cindy Sheehan is on trial right now for just that. Hope the jury nullifies (right...)

Tue, 04/24/2012 - 23:28 | 2372304 jeff montanye
jeff montanye's picture

also check out what has happened to the free interplay of ideas in the groves of academe.


Tue, 04/24/2012 - 20:20 | 2371947 BooMushroom
BooMushroom's picture

Only works if you're a bigwig crony capitalist, or the Secretary of the Treasury. Little guys like you and me are screwed.

Tue, 04/24/2012 - 15:15 | 2371058 Nobody For President
Nobody For President's picture

"I have been lied to all my life and I am pissed off on epic levels."


Welcome to the (fight) club.

Tue, 04/24/2012 - 15:23 | 2371098 blunderdog
blunderdog's picture

You think he's got it bad, consider that poor James Kidney guy.  Sounds like he's a real pisser.

Tue, 04/24/2012 - 23:32 | 2372321 jeff montanye
jeff montanye's picture

too bad it's in name only.  there sure are a lot of toxins in the financial world that need some straining out and flushing down the toilet (yes jon corzine, i'm talking to you).

Tue, 04/24/2012 - 15:23 | 2371099 jus_lite_reading
jus_lite_reading's picture

>>"...and I am pissed off on epic levels."


You and me both... good thing I do yoga

Tue, 04/24/2012 - 16:21 | 2371332 WonderDawg
WonderDawg's picture

Kickboxing classes work, too.

Tue, 04/24/2012 - 16:30 | 2371358 NotApplicable
NotApplicable's picture

Home lobotomy kit, FTW!

Tue, 04/24/2012 - 16:36 | 2371388 NewWorldOrange
NewWorldOrange's picture

Where's Nurse Ratchet when you need her? This country is a cuckoo's nest.

Tue, 04/24/2012 - 16:26 | 2371350 5880
5880's picture

yuri b zelinsky of tacoma md?

I love google

Tue, 04/24/2012 - 14:50 | 2370897 fightthepower
fightthepower's picture

Fuck you Bernanke!

Tue, 04/24/2012 - 14:51 | 2370906 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

fuck you mary shapiro

Tue, 04/24/2012 - 15:34 | 2371153 BLACK_DOG
BLACK_DOG's picture

she's a dyke? sorry i ment "!" 

Tue, 04/24/2012 - 18:40 | 2371767 supafuckinmingster
supafuckinmingster's picture

Mary Shapiro, Ben Bernanke, Alan Greenspan, Janet Yellen, Donald Kohn, Tim Geithner..................it all leads to Rothschilds...Morgans...Chases'....wake up America...........you are a vassal of Judaism. And not the Chomsky, or Jon Stewart Judaism..........no no......I'm talking the Yitzhat Shamir type.

Tue, 04/24/2012 - 14:50 | 2370902 Dr. Engali
Dr. Engali's picture

The world remains silent while the honest players are slaughtered and the criminals are rewarded. We're fucked.

Tue, 04/24/2012 - 14:56 | 2370937 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Now the SEC can go back to watching tranny porn, thank goodness!

Tue, 04/24/2012 - 15:05 | 2371002 UP Forester
UP Forester's picture

The SEC was booted off of the midget tranny porn sites for being too twisted.

That's why they have to look like they're doing something, for a change.

Tue, 04/24/2012 - 15:24 | 2371101 ragequit
ragequit's picture

tranny porn stars need to make money too.  you people are so cruel.

Tue, 04/24/2012 - 15:02 | 2370980 LongSoupLine
LongSoupLine's picture

I am simply and utterly disgusted.

I honestly fear for the future of ZH at this point.

Tue, 04/24/2012 - 15:05 | 2371001 HarryM
HarryM's picture

I'm pretty sure anyone who visits this site has their name added to a list

Tue, 04/24/2012 - 15:10 | 2371025 Dr. Engali
Dr. Engali's picture

I'm pretty sure you can say that about this site and a few other's. I keep waiting for the day when I go to the Hedge for news and I see an "This page is no longer available" message  on the screen. 

Tue, 04/24/2012 - 15:25 | 2371105 blunderdog
blunderdog's picture

Better for TPTB to leave the site alone.  The fringies that hang here would be more motivated to go do stuff if they weren't all online posting their daily rants.

Tue, 04/24/2012 - 16:38 | 2371404 NotApplicable
NotApplicable's picture

Oh, they'll leave ZH alone for the time being. For them, it's a free honeypot to observe. It will only be taken out if it's popularity surpasses HuffPo (or some similar site).

My barometer is watching the visibility of Mises.org (and LewRockwell.com). At some point, Krugman will lose his last follower to them, and MSM ridicule will no longer be effective enough to keep the herd away. Then they'll start attacking it in a last ditch effort to scare the herd away, lest they be tainted as a racist (because somehow freedom is really all about slavery).

Of course, by then we'll all be facebooking from the comfort of our FEMA camp, fully plugged into the Matrix.

Tue, 04/24/2012 - 17:02 | 2371520 blunderdog
blunderdog's picture

    It will only be taken out if it's popularity surpasses HuffPo (or some similar site).

Yeah, right.

You're suggesting that TPTB that are secretly running everything will shut down a great source of intelligence after it attracts a large enough group of suspects...er...viewers.

Guess you're not perceiving the incredibly stupid part of that prediction, huh?

Tue, 04/24/2012 - 22:22 | 2371997 cbxer55
cbxer55's picture

Funny you mention that. I work for the government, and visit this site during my lunch break, from a work computer. It has not been banned or black-balled yet.

 I am not a desk rider. I am a Sheet Metal Mechanic, and I make a lot less than you probably think I do. My work station is inside fuel tanks on communications aircraft.

Luch is over, gotta go.



Tue, 04/24/2012 - 15:07 | 2371007 Waffen
Waffen's picture

Doubtful, what happens when you remove the steam valves?

Do NOT follow this link or you will be banned from the site!