SEC Charges 36 Firms with Making Fraudulant Muni Bond Offerings

Thirty six municipal bond underwriters will have to pay approximately $9 million to resolve civil fraud charges over their municipal bond offerings. This settlement is believed to be one of the first agreements of its kind with U.S. securities regulators.

Yesterday, the U.S. Securities and Exchange Commission (SEC) indicated the charges stemmed from a March 2014 invitation to brokers and bond issuers to voluntarily report disclosure violations, such as material misstatements and omissions, in their bond offering documents.

The cases were the first under the program intended to increase transparency in what has been considered a lightly regulated sector. An SEC’s representative in the enforcement division, said the firms represented about 70 percent of the dollar value of all municipal bonds issued in the United States during a four year period that ended on Sept. 30, 2014.

Among the firms involved in the settlements include Merrill Lynch, BNY Mellon, Goldman Sachs, Citigroup, JP Morgan, Royal Bank of Canada and Morgan Stanley. As is customary, all have agreed to settle the charges without admitting or denying the allegations. In exchange for self-reporting, issuers and underwriters were assured they would receive favorable settlement terms.

The experienced securities fraud attorneys at Colling Gilbert Wright & Carter represent investors who have lost money due to material misrepresentations and omissions during the sale of securities. If you have lost money as a result of a misrepresented financial product, please contact us for a free case evaluation.