SEC Director of Enforcement Andrew Ceresney reported that a jury verdict found the City of Miami to be "a recidivist violator of the federal securities laws." The jury held the city's former Budget Director liable on multiple counts of antifraud violations of federal securities laws. The violations were connected to "disclosures concerning the deteriorating financial condition of the City during 2007 and 2008 and in three separate offerings of municipal securities in 2009." Mr. Ceresney noted that this action marked the "first federal jury trial by the SEC against a municipality or one of its officers for violations of the federal securities laws . . . [and that the SEC] will continue to hold municipalities and their officers accountable, including through trials, if they engage in financial fraud or other conduct that violates the federal securities laws."
Commentary / Steven Lofchie
The SEC seems to have taken a real interest in both requiring improved disclosure by municipal entities and in bringing enforcement actions when disclosures or statements by municipal entities contain material misstatements or omissions. At some point, sooner or later, the politics of this will come to a head, posing the question: will municipal entities be subject to the same disclosure requirements that apply to private entities?
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