SEC Sues Honest Rating Agency

[MachineGhost]

From Porter Stansberry:

The Securities and Exchange Commission (SEC) is once again doing something that should make you furious. It's suing one of the few ratings firms in the country that actually publishes real, useful ratings on insurance companies, banks, and bonds. The firm is called Egan Jones and its founder, Sean Egan, is one of the most trustworthy, earnest, and honest folks I've met in finance.

Interestingly, his business model is like mine: The folks using his ratings pay for them, unlike Moody's and Standard & Poor's, where the bond-issuing banks (aka, the big banks) pay for the credit rating. SEC rules require every bond sold in the U.S. come with at least two ratings by its approved ratings agencies. These "approved" agencies are the same ones that rated every horrible subprime mortgage as triple-A during the credit bubble. Guess who didn't? Sean Egan.

Like me and a few others, Egan warned loud and clear that the subprime mortgage market suffered from massive problems. He wouldn't go along with the charade that was orchestrated by the big banks and their SEC lapdogs. You'll never guess why the SEC is suing Sean Egan. It's not because of his ratings – which have always been vastly more accurate than the SEC-sponsored firms. No, it's because he applied to become SEC-approved. The agency is suing him for civil securities fraud because it alleges he filled out the form incorrectly. I'm not making that up.

[MediumTex]

Interestingly, his business model is like mine: The folks using his ratings pay for them, unlike Moody's and Standard & Poor's, where the bond-issuing banks (aka, the big banks) pay for the credit rating. SEC rules require every bond sold in the U.S. come with at least two ratings by its approved ratings agencies. These "approved" agencies are the same ones that rated every horrible subprime mortgage as triple-A during the credit bubble. Guess who didn't? Sean Egan.

Like me and a few others, Egan warned loud and clear that the subprime mortgage market suffered from massive problems. He wouldn't go along with the charade that was orchestrated by the big banks and their SEC lapdogs. You'll never guess why the SEC is suing Sean Egan. It's not because of his ratings – which have always been vastly more accurate than the SEC-sponsored firms. No, it's because he applied to become SEC-approved. The agency is suing him for civil securities fraud because it alleges he filled out the form incorrectly. I'm not making that up.

I got a chuckle out of the underlined sections, since Stansberry has also been sued for fraud by his clients.

[dualstow]

I only know the name Porter Stansberry because I get his nutty penny stock ads in the mail. (This is because I had a subscription to someone else's stock newsletter). What a weirdo!

[MachineGhost]

I got a chuckle out of the underlined sections, since Stansberry has also been sued for fraud by his clients.

Porter was sued by the SEC not his clients.  The SEC's allegations were baseless and just the usual protection racket activity.  Get the full scoop: http://www.stansberrysecfraud.com/

If it weren't for those few brave souls like Porter, we wouldn't have a First Amendment that works in practice.  You don't have to like his politics or his company's bombastic marketing hype to respect him for standing on principle.

MG