In a precedent-setting action, the Securities and Exchange Commission is investigating whether underwriters are fulfilling their obligations to determine if issuers are complying with their continuing disclosure requirements.

The probe, which appears to initially be focused in California, has led underwriters to fear enforcement action may be forthcoming, with SEC charging firms for violating its Rule 15c2-12 on disclosure, Municipal Securities Rulemaking Board rules, or even securities fraud laws.

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