A U.S. District Judge for the Southern District of New York entered a Final Judgment on consent against a New York town and its local development corporation for allegedly hiding a "deteriorating financial situation" from municipal bond investors. The SEC claimed that officials fraudulently concealed the financial impact of the construction of a minor league baseball stadium and declining sales and property tax revenues. The stadium's bonds were issued by the development corporation and guaranteed by the town. Town officials also allegedly failed to disclose to investors that the town would likely need to subsidize bond payments and thus further deplete its general fund.
The Final Judgment requires the town and the development corporation to adhere to several financial reporting and auditing conditions. The Final Judgment also restricts the town from engaging in municipal securities offerings. The SEC is continuing its enforcement actions against several town officials for related misconduct.
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