The SEC affirmed the ruling of administrative law Judge Brenda Murray, who in June 2001found that Miami officials misled investors in the disclosure documents of three bondissues sold in 1995 and in secondary market disclosure documents about the city'sdeteriorating financial condition.
City officials now must disclose the violation in future financing documents, saidattorneys for the SEC and Miami.
"While we're disappointed, the city's financial life will go on," said Thomas Tew, withof Tew Cardenas Rebak Kellogg Lehman DeMaria Tague Raymond & Levine, the firmrepresenting Miami. Tew said he plans to meet with city officials soon to discusswhether there will be an appeal.
"After seven years, it just seems to be an unnecessary act [by the SEC], seeing how noneof the people who raised the questions are still with the city," Tew said.
The SEC cited the city in 1999 for failing to disclose its deteriorating financialcondition when it sold three bond issues totaling $116.5 million in 1995. At the time,the city had a deficit of between $30 million and $40 million
In 1996, Miami declared a financial emergency and Florida's governor appointed aFinancial Oversight Board.
During an administrative hearing in 2001, city officials said they were not responsiblebecause their professionals did not inform them about the financial problems, andbesides, no one connected with the 1995 debt sales was still on the city's payroll.
After the administrative hearing judge ruled against the city, Miami asked the SEC toreview the hearing and evidence. Friday's findings are the result of that review.
SEC attorney Theresa Verges said the commission's cease-and-desist order was a prettystrong message. "The city is primarily responsible for its financial statements," sheadded.
"Miami still maintains that it did nothing wrong," the SEC order stated. "The fact thatMiami has pointed its finger at ... other bond professionals, without taking anyresponsibility for its own conduct, suggests that Miami has not accepted fully itsresponsibility for the city's financial disclosures."
"It is likely that Miami will sell bonds in the future," the order continued. "The citymust be given the clear message that Miami is responsible for the adequacy of itsfinancial disclosures when seeking money from the investing public."
Dain Rauscher Inc., formerly Rauscher Pierce Refsnes Inc., in 2001 paid $200,000 tosettle SEC charges that it failed to ensure that Miami's deteriorating financialcondition was fully disclosed in the official statement for one of the city's 1995 bondissues.
In 2000, former Miami city manager Cesar Odio and former finance director Manohar Suranasettled with the SEC. Without admitting or denying guilt, they consented to thecommission's findings and cease-and-desist orders for failing to disclose the city'scondition.
