January 23, 2021

DealBook: Egan-Jones Barred for 18 Months on Some Ratings

Sean Egan, the president of Egan-Jones Ratings Company, at House panel in 2008.Alex Wong/Getty ImagesSean Egan, the president of Egan-Jones Ratings Company, at House panel in 2008.

The Securities and Exchange Commission said on Tuesday that Egan-Jones, the upstart credit ratings firm run by Sean Egan, had agreed to an 18-month ban from rating asset-backed and government securities issuers as a nationally recognized statistical rating organization.

The agreement settles accusations that the firm made misstatements about its record when applying for a government designation, the S.E.C. said.

“Accuracy and transparency in the registration process are essential to the commission’s oversight of credit rating agencies,” Robert Khuzami, director of the S.E.C.’s division of enforcement, said in a statement.

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Egan-Jones, which also agreed to correct any deficiencies and submit a report describing those steps, can still rate asset-backed and government securities issuers during the ban — just not with the government blessing that confers special authority on its opinions. The firm retains that designation for its other ratings categories.

Egan-Jones plans to reapply for the designation once the ban ends, said Bill Hassiepen, co-head of the ratings desk at Egan-Jones, who called the settlement terms “agreeable.”

“The firm is most satisfied that this matter is resolved and behind us,” Mr. Hassiepen said in a statement. “This settlement allows Egan-Jones to focus all of our efforts and resources on what we do best — producing the most timely, accurate and independent ratings in the business.”

The S.E.C. had accused Egan-Jones of exaggerating its record in its application to the government. The firm had said it had 150 ratings of asset-backed securities and 50 ratings of governments under its belt, when it actually had none at that time, according to the agency. The S.E.C. had also found that Egan-Jones had violated provisions governing conflicts of interest.

Egan-Jones, notable for its business model of charging investors rather than issuers for its ratings, neither admitted nor denied the accusations.

Article source: http://dealbook.nytimes.com/2013/01/22/egan-jones-barred-for-18-months-on-some-ratings/?partner=rss&emc=rss

Economix: Podcast: Taxes, Debt and Regulation

General Electric is the biggest corporation based in the United States, and it had a very successful 2010, with billions of dollars in profits.

But it paid nothing at all in taxes in the United States. As David Kocieniewski writes in The Times, the company actually claimed a tax benefit of $3.2 billion. What is the basis of G.E.’s extraordinarily successful tax strategy — and what are its implications for the fiscal health of the United States? We discuss these issues at length in the latest Weekend Business podcast.

In the Economic View column in Sunday Business, Greg Mankiw, the Harvard economist, adopts the voice of a future president of the United States on a day of avoidable crisis: the day the country’s debt finally comes due. In the podcast, I talk to Professor Mankiw about the current crisis that prompted this dystopian vision, and about his prescriptions for making sure it never happens in the real world.

The Dodd-Frank law emerged in response to the financial crisis of 2007 and 2008. It is hundreds of pages long, but Congress left many of the regulatory details to the Treasury and other government entities to decide. Gretchen Morgenson joins me in a conversation about some major issues that are being resolved behind the scenes.

One is whether foreign-exchange contracts should be exempt from the requirement that financial derivatives be cleared and traded on exchanges or swap facilities. Another involves the classification of mortgages: Which of them should be deemed risky enough to require that some of their credit risk be retained by issuers of asset-backed securities? And a third involves what are known as covered bonds — pools of debt obligations whose assets could be out of the reach of regulators in the event of a bank failure. In her column in Sunday Business, Ms. Morgenson writes about these controversies — and calls for much greater transparency to protect investors.

In another conversation on the podcast, David Gillen and Natasha Singer discuss Estée Lauder, the woman and the global business based on the promise of beauty. Ms. Singer writes in Sunday Business about how the Lauder family — and other top managers at the company — are trying to preserve the legacy of the company’s founders, while also making the business nimble enough to compete in a world where Lady Gaga is a trendsetter.

A discussion of the week’s news also includes the supply-chain disruptions caused by the disasters in Japan, the financial and political problems in Portugal, ATT’s proposed merger with T-Mobile, and the legal decision that sets back Google’s plans for digitizing books.

As articles discussed in the podcast are published, links will be added in this post.

And you can find specific segments at these junctures: General Electric and corporate taxes (36:31); headlines (29:15); Estée Lauder (26:48); financial regulation (17:54); Gregory Mankiw on the federal debt (9:03); the week ahead (2:04).

Article source: http://feeds.nytimes.com/click.phdo?i=50b3b93e17155cdb05a2b6b52134d8a9