The former town attorney and deputy supervisor of Oyster Bay, Long Island, Leonard Genova, agreed to a permanent injunction from participating in any future municipal securities offerings.
In a Complaint filed in the U.S. District Court for the Eastern District of New York, the SEC claimed that Mr. Genova, together with the former Supervisor and Chief Executive of Oyster Bay, failed to disclose to investors certain material information concerning guarantees on 26 securities offerings the town issued from 2010-2015. The "indirect" guarantees covered more than $20 million to a vendor who had a close relationship with several local officials. In return, the vendor allegedly provided Mr. Genova and other officials with free limousine services, use of office space, and free food and beverages at the vendor's restaurants, along with cash payments. As previously covered, the SEC filed charges against Oyster Bay and its former supervisor for related misconduct in November 2017. By concealing the guarantees, the SEC claimed that the Oyster Bay officials misled investors by hiding information material to the town's liquidity and overall financial well being.
The SEC charged Mr. Genova with violating Securities Act Sections 17(a)(1) and (3), Exchange Act Section 10(b) and Rule 10b-5, as well as aiding and abetting violations under Exchange Act Section 20(a) in connection with the town's misconduct.
The Court has yet to approve the settlement and may impose additional civil money penalties against Mr. Genova.
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