Egan-Jones, a US-based family-owned credit ratings agency, has written a letter defending its practice after a Securities and Exchange Commission (SEC) order published earlier this week.

The order called into question the agency’s ability to “consistently produce credit ratings with integrity” given its current “financial and managerial resources”. Egan-Jones’ outside counsel argued that this “unfair and demonstrably harmful allegation” has caused reputational and financial damage to the firm.

Egan-Jones said the SEC order – published in response to the agency’s application to expand its rating capabilities to the asset-backed securities and government securities classes – could be interpreted as suggesting these concerns apply to the agency’s capabilities as a whole rather than specifically to these asset classes.

The order also contained multiple references to “non-public information” that led the agency to question its ability to produce ratings with integrity, and noted that there are “questions about the validity of QIB [qualified institutional buyer] certifications provided with the application and the period of time they cover.”

Egan-Jones has asked the SEC to “correct and limit this language to the application for the two licences” in order to “curb the harm to the firm that already is occurring”.

Egan-Jones, founded in 1995, is one of 11 nationally recognised ratings agencies whose ratings can be used for regulatory purposes. In recent years, it has risen from relative obscurity to become a key agency in the private credit boom. Last year, the firm said its team rated over 3,000 private credit deals, and has rated over 14,000 since 2019.

This is not the first time it has come under SEC scrutiny. In 2022 both Egan-Jones and its chief executive and founder, Sean Egan, were charged with conflict-of-interest violations by the regulator. At the time, the SEC said Egan “became involved in business and marketing activities concerning a client and was influenced by sales and marketing considerations while participating in determining a credit rating for that client.”

Without admitting or denying the SEC’s findings, Egan-Jones agreed to settle the matter by paying a $1.7 million penalty and more than $146,000 in disgorgement and interest.

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