WASHINGTON — The Securities and Exchange Commission filed 17 municipal securities-related enforcement actions during the fiscal year that ended Sept. 30, more than twice the number filed in fiscal 2011, the commission announced yesterday.
Those cases included one in which Goldman Sachs & Co. agreed to pay more than $14 million to the federal government, Massachusetts’ issuers, and the state attorney general after one of its former investment bankers used the office, while seeking bond business from the commonwealth, to conduct campaign activities for then-Massachusetts treasurer Timothy Cahill, who was running for governor. This was the first SEC enforcement action over pay-to-play violations involving “in-kind,” non-cash contributions to a political campaign. In addition, the more than $14 million included a $3.75 million penalty, the largest ever paid for violations of Municipal Securities Rulemaking Board pay-to-play rules and then transferred $1.88 million of that amount to the MSRB.
In another case, the SEC filed charges in a U.S. district court in Michigan against the former mayor and treasurer of Detroit, as well as an investment advisor to the city’s pension funds, over a scheme in which the public officials were paid lavish gifts to steer pension investment business to the advisory firm. The former mayor was Kwame Kilpatrick and the former treasurer was Jeffrey Beasley. The advisor was MayfieldGentry Advisors LLC and its chief executive officer Chauncey Mayfield.
The SEC cited the muni cases in a release announcing that the commission filed a total of 734 enforcement actions during fiscal year 2012, one less than last year’s record of 735.
The SEC also said it obtained orders in fiscal 2012 requiring firms and individuals to pay more than $3 billion in penalties and disgorged ill-gotten gains — an 11% increase over the amount ordered to be paid last year.
“The record of performance is a testament to the professionalism and perseverance of the staff and the innovative reforms put in place over the past few years,” SEC Chairman Mary Schapiro said in the release. “We’ve brought more enforcement actions in each of the last two years than ever before including some of the most complex cases we’ve ever seen.”
The reforms included the creation of specialized enforcement units, one of which is the municipal securities and public pensions unit, as well as an enhanced ability to collect, process, and analyze tips and complaints.