The Chinese Rating Agency Dagong announced that it was linking with United States and Russian partners to form an ‘independent’ rating group.  Dagong would set up a joint venture company, called Universal Credit Rating Group, with Egan-Jones Rating (EJR) and RusRating JSC.  According to the statement of Dagong the partners do not represent the interest of any particular country or group and would provide impartial ratings to global capital markets. 

Egan-Jones was granted a NRSRO status in 2007 however it was sued by the SEC in April this year.  The company countersued to force the SEC to bring its allegations of misrepresentation against the firm before a federal judge.  Egan-Jones said in a complaint filed in federal court in Washington that it would be deprived of its rights, including that to a jury trial, if the SEC’s enforcement action was to proceed in an “administrative forum” rather than in court where the company can present evidence of the SEC’s “improper” motive for making the allegations.  Mr. Egan stated in a recent interview that the major credit rating agencies were implicated in the financial meltdown because of inaccurate ratings, however the SEC did not even give them as much as a ‘parking ticket’!

The firm, which calls itself an alternative to the larger providers of credit ratings because it gets paid by subscribers rather than by issuers of debt, said in its complaint that the SEC conducted a biased investigation that resulted in the administrative proceeding in April. 

Dagong keeps bashing the major credit rating agencies for not being impartial and have ‘proven inadequate’.  Not clear is the significance of Dagong’s definition of an ‘independent’ credit rating agency.  Dagong, Egan-Jones and RusRating have shareholders.  So do Fitch, Moody’s and S&P and they are not beholden to any government, in essence they are just as independent as Dagong.

Source:  Agence France Press Beijing