SEC enforcement

Officials are aiming by fall to finalize a bond exchange offer that would restructure general obligation bonds and resolve a legal dispute with bondholders.

The SEC’s Public Finance Abuse Unit has brought four enforcement cases against municipal issuers this year, which signals a shift from the usual focus on underwriters and municipal advisors.

Park View School Inc., a charter school operator in Prescott Valley, has filed for bankruptcy following years of financial mismanagement and a lawsuit from the SEC.

It's the third time this month that the SEC has announced charges against city officials for disclosure-related violations.

The Securities and Exchange Commission has charged the City of Rochester, New York, its former finance director, former CFO and their municipal advisor with misleading investors in a $119 million bond offering.

Issuers need to be careful with bonds specifically marketed as green, said the head of Office of Municipal Securities.

The SEC charged the town, former mayor Vern Breland, municipal adviser Twin Spires Financial and its owner Aaron Fletcher with misleading investors in connection with bond offerings in 2017 and 2018.

The Securities and Exchange Commission’s Division of Examinations intends to home in on municipal advisor obligations, transfer agents and municipal issuer disclosures.

The Securities and Exchange Commission has charged Texas' Crosby Independent School District and two individuals in connection with the school district’s 2017 fiscal year financial statements.

The SEC terminated its latest proceedings against the city after an independent consultant found the city was in "substantial compliance" with a 2014 judgment.

The defendants believe the charges are lacking on numerous levels while the SEC argued that fee-splitting is a clear and known rule violation.

Todd Cipperman, founding principal of Cipperman Compliance Services, talks with Chip Barnett about compliance and disclosure and regulation by the federal government in 2022. (42 minutes)

Unregistered municipal advisor activity and breaches of fiduciary duty remain priorities.

The defendants are raising questions about due process and the definition of fee-splitting arrangements.

"The vast majority of muni issuers are trying to do the right thing,” Zehner said. “The vast majority of underwriters and municipal advisors are trying to do the right thing.”

Following the news that Rebecca Olsen, former director of the Office of Municipal Securities has moved to deputy chief in place of Mark Zehner, the Securities and Exchange Commission has named Ernesto Lanza as acting director.

The Securities and Exchange Commission has charged an Illinois-based broker with defrauding three investors out of $800,000 by luring them into investing in nonexistent tax-exempt bonds.

The Securities and Exchange Commission has obtained a final judgment against John Paulsen, a broker-dealer charged with aiding and abetting a pay-to-play scheme with the New York State Common Retirement Fund.

The Commission’s enforcement results highlight the importance of proper disclosure.

The presence of unregistered — and potentially unqualified — advisors providing municipal advisory services to state and local governments and other municipal entities is a cause for concern and greater regulatory scrutiny.