Date:August 24, 2017
A settlement announced this week by the SEC serves as a reminder that the Commission is in the process of reviewing the Municipalities Continuing Disclosure Cooperation participants, and that it will continue to pursue issuers who do not report non-compliance with continuing disclosure obligations in their offering statements.
The SEC announced on Wednesday that it settled with the executive director of the Beaumont Financing Authority, the underwriter for the Financing Authority’s bonds and one of the principals of the underwriter in his personal capacity. The charges were based upon false statements made in the Financing Authority’s Official Statements about prior compliance with continuing disclosure obligations relating to five bond offerings between 2012 and 2013.
The SEC’s Division of Enforcement in 2014 offered the MCDC Initiative, which allowed municipal issuers and underwriters to self-report incidences of their failure to report non-compliance with continuing disclosure obligations in municipal bond offering statements. The Financing Authority and the underwriter did not report the non-compliance. The SEC stated that the fines against the underwriter and the executive director would have been more lenient had the issuer and the underwriter participated in the MCDC program.