NEW YORK, March 13 (Reuters) - Egan-Jones Ratings was

sued by two former executives who said they were fired after

telling the U.S. Securities and Exchange Commission that the

credit rating agency improperly let business concerns drive its

ratings, including after last year's banking crisis.

According to a complaint filed in Manhattan federal court,

former chief risk officer Michael Brawer and former head of

ratings Philip Galgano were let go in January for whistleblowing

about conflicts of interest in Egan-Jones' ratings practices.

They said their firings violated the federal Dodd-Frank

Act's whistleblower protection provision, as well as New York

labor law. Sean Egan, the agency's co-founder and chief

executive, is also a defendant.

Egan-Jones' general counsel Eric Mandelbaum said in an

email: "We are aware of the lawsuit and will be defending the

matter."

The SEC declined to comment.

Egan-Jones is one of 10 so-called nationally recognized

statistical ratings organizations, a group that also includes

Moody's Investors Service, S&P Global Ratings and Fitch Ratings.

NRSROs assess the creditworthiness of companies, local and

state governments, and countries.

Investors use their ratings to assess the safety of and

value bonds and other debt that ratings recipients sell.

Brawer and Galgano objected to what they called an "ongoing

pattern of improper conduct" that they reasonably believed could

violate federal securities law.

Both accused Egan-Jones of pressuring staff to alter

preliminary "indicative" ratings on private transactions to

encourage potential customers to let it issue final ratings.

They also said Egan-Jones applied pressure to change ratings

that appeared out of line with rivals' ratings and might be seen

as inaccurate, and said its "points system" for rating analysts

improperly took sales and marketing into account.

In addition, the plaintiffs said Egan demanded that

Egan-Jones downgrade all "junk" rated banks even if ratings

criteria did not justify it, following last year's seizures of

Silicon Valley Bank and First Republic Bank.

An analyst allegedly told Galgano around May 5, 2023 that

Egan expressed concern that his agency might be sued "upon any

bankruptcy of any rated bank, if Egan-Jones did not immediately

downgrade its rating of all banks below investment grade."

Brawer and Galgano said they periodically reported concerns

about Egan-Jones to the SEC, including in several filings last

year with its Office of the Whistleblower.

They said Egan harassed them after learning about their

whistleblowing and fired them on Jan. 3 in retaliation, though

neither had received any adverse performance reviews.

The lawsuit seeks to recoup a variety of pay and benefits,

punitive damages, and other remedies.

The case is Brawer et al v Egan-Jones Ratings Co et al, U.S.

District Court, Southern District of New York, No. 24-01895.