Originally published in the Los Angeles & San Francisco Daily Journal, September 18, 2013
In light of the recent wave of municipal meltdowns ― including four cities in California alone ― the world of municipal securities regulation just got a whole lot sexier.
Just in the last six months, the U.S. Securities and Exchange Commission has brought a series of groundbreaking cases alleging securities fraud by municipal bond issuers and public officials. In July, for instance, the SEC filed a civil complaint against Miami and its former budget director seeking financial penalties from both defendants for alleged anti-fraud violations relating to the city's 2009 municipal bond offerings. SEC v. City of Miami, 1-13-cv-22600 CVA (S.D. Fla. July 19, 2013). According to the complaint, the offering documents contained material misrepresentations and omissions about internal fund transfers used to "mask" the city's deficits and "falsely inflate" its reserves.
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