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Screenshot of a breaking news alert e-mail from Q2 2017
The Securities and Exchange Commission (SEC) has announced enforcement actions against 71 municipal issuers and other obligated persons for violations in municipal bond offerings.
The SEC found that from 2011 to 2014, the 71 issuers and obligated persons sold municipal bonds using offering documents that contained materially false statements or omissions about their compliance with continuing disclosure obligations. Continuing disclosure provides municipal bond investors with important information, including annual financial reports, on an ongoing basis. The SEC’s 2012 Municipal Market Report identified issuers’ failure to comply with their continuing disclosure obligations as a major challenge for investors seeking information about their municipal bond holdings.
Andrew Ceresney, Director of the SEC Enforcement Division, said:
The diversity among the 71 entities in these actions demonstrates that continuing disclosure failures were a widespread and pervasive problem in the municipal bond market. The MCDC Initiative has brought attention to this important issue and resulted in increased compliance by municipal issuers and underwriters.”
The parties settled the actions without admitting or denying the findings and agreed to cease and desist from future violations. Pursuant to the terms of the initiative, they also agreed to undertake to establish appropriate policies, procedures, and training regarding continuing disclosure obligations; comply with existing continuing disclosure undertakings, including updating past delinquent filings, disclose the settlement in future offering documents, and cooperate with any subsequent investigations by the SEC.
LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit, stated:
The terms of the settlements reflect the credit these issuers earned for their cooperation in self-reporting pursuant to the MCDC initiative. Because the issuers also voluntarily agreed to take steps to prevent future violations, both they and their investors have benefited from the initiative.”
The SEC has now filed a total of 143 actions against 144 respondents as part of the MCDC Initiative.