WASHINGTON — The municipal securities market is "fertile ground" for further enforcement initiatives aimed at getting market participants to comply with their obligations under the law, the Securities and Exchange Commission's enforcement director said on Wednesday.
Andrew Ceresney made the comments while speaking to members of the District of Columbia Bar about the enforcement division's activities and priorities.
He discussed the Municipalities Continuing Disclosure Cooperation initiative, a time-limited initiative launched by the muni and public pensions enforcement unit that allows issuers, other borrowers and underwriters to get lenient settlement terms if they voluntarily self-report to the SEC, by Sept. 10, their failures to ensure bond offering documents were not false or misleading about their compliance with their continuing disclosure obligations.
The program has been controversial amongst its potential participants, but Ceresney said he views it as a great program and that the muni unit will look to launch more initiatives.
"It demonstrates the idea that these are important obligations," Ceresney said. "We ultimately want people who have these obligations to self-report them."
Though he declined to discuss any details about possible new muni enforcement initiatives, Ceresney said the muni market provides a good opportunity for more and praised the high-level of activity of the muni unit, which is led by LeeAnn Gaunt.
"I think the muni unit has been very active," Ceresney said. "I think it is fertile ground for us."
Ceresney also spoke at length about settlements requiring admissions of guilt, an issue that spans all the markets the SEC regulates. Once the SEC decides that an admission of guilt is warranted, it is non-negotiable, Ceresney told the group.
A number of attorneys present pressed the director on why nearly every other aspect of a settlement, including financial penalties, is negotiable but admissions are not. Ceresney said it is unseemly to make the decision to require an admission of guilt subject to a back-and-forth process.
"We want this to be an assessment of the case on the facts," he said. "We don't want it to devolve into 'Okay, we'll give you $5 million more if you back off the admissions.'"
Ceresney warned the attorneys that the SEC is taking the position that it is ready and willing to take cases to trial if accused wrongdoers are not prepared to accept that aspect of a proposed settlement.
"We're either going to settle with admissions, or we're going to litigate," he said.
