Alleging multiple violations of federal securities laws in connection with fraudulent accounting and the resulting inflation of its bond ratings, the SEC filed suit against the City of Miami, seeking: 1) a declaration that Defendants have violated the federal securities laws; 2) an order directing the City to comply with the prior Commission order; 3) a permanent injunction enjoining Defendants from violating Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a) and Section 10(b) and Rule 10b–5 of the Exchange Act, 15 U.S.C. § 78j(b); and 4) an order directing Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d).
The City filed a motion to dismiss. The court declined to dismiss on any of the City’s stated grounds.
Although the court conceded that the City had made a strong argument regarding materiality, it concluded that, “Viewing the allegations concerning materiality in the light most favorable to the SEC, the Court concludes materiality is minimally satisfied.”