Underwriters who fail to revamp due diligence and disclosure practices for bond documents in negotiated transactions are vulnerable to enforcement action based on a recent pension case New Jersey settled with the Securities and Exchange Commission, a dealer group said in guidance unveiled last week.

The Bond Dealers of America’s seven-page document, entitled “Lessons Learned for Senior and Sole Managers in Negotiated Offerings Per SEC Action Against the State of New Jersey,” focuses on the responsibilities of public finance investment bankers, who generally lead an underwriter’s due-diligence efforts in negotiated offerings with state and local governments.

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