Securities and Exchange Commission denies Egan-Jones bid to expand ratings business

The SEC has blocked Egan-Jones Ratings Company from re-entering two lucrative corners of the credit ratings market, finding that the firm’s application contained inaccuracies about when it actually started rating certain securities. The denial, issued on August 12, marks the latest chapter in a decade-long regulatory saga for the small but persistent agency.

Egan-Jones had applied in January 2026 to re-register as a Nationally Recognized Statistical Rating Organization for asset-backed securities and various government debt categories. Seven months later, the SEC said no.

What went wrong with the application

The rejection centered on two core issues. First, the SEC found that Egan-Jones submitted conflicting Qualified Institutional Buyer certifications. These certifications claimed the firm had been issuing asset-backed securities ratings since December 2019 and March 2020. The problem: the agency didn’t actually begin continuous ABS ratings until mid-2020.

The second issue ran deeper. A separate SEC order from March 23, 2026, raised broader concerns about whether Egan-Jones had the financial and managerial resources necessary to maintain the integrity of its credit ratings.

A pattern the SEC has seen before

This isn’t Egan-Jones’s first run-in with the SEC over application accuracy. The firm lost its NRSRO registration for asset-backed and government securities back in 2013, when the commission found material misstatements in its original applications.

The 2013 case also entangled founder Sean Egan, who remains subject to an association bar related to prior misconduct.

Egan-Jones does retain its NRSRO status for other asset classes, including corporate debt, insurance company obligations, and financial institution ratings. But the government securities and ABS markets remain off limits.

Why NRSRO status matters

The NRSRO designation is more than a regulatory gold star. It’s a gatekeeper credential. Many institutional investors, pension funds, and regulated financial entities are required by law or internal policy to rely on ratings from NRSROs when making investment decisions. Without the designation for a particular asset class, a ratings agency is effectively invisible to a huge swath of the market.

The US credit ratings industry has long been dominated by S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings. Smaller players like Egan-Jones, DBRS Morningstar, and Kroll Bond Rating Agency have tried to carve out niches, but the barriers to entry (and re-entry) are formidable.

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