Firms paid about $4.58 million for violating federal securities laws between 2011 and 2014
The Securities and Exchange Commission charged and fined 14 municipal-bond underwriting firms on Tuesday for giving investors inaccurate information in the third batch of penalties for such firms under the U.S. agency’s voluntary self-reporting program.
The firms—which didn’t admit or deny the charges—paid about $4.58 million for violating federal securities laws between 2011 and 2014 by selling municipal debt using offering documents that contained “materially false statements or omissions” about the borrowers’ compliance with disclosure obligations. Regulators said the firms failed to conduct adequate due diligence to identify the problems before selling the bonds.
The SEC launched the crackdown in 2014 in a bid to pressure underwriting firms and state and local borrowers to admit voluntarily to lapses in investor disclosures in exchange for favorable settlement terms. The lapses include such issues as failing to disclose missed filings of annual financial reports or credit-rating changes.
The agency said Tuesday that 72 underwriters have been charged under the voluntary self-reporting program. The first round of charges was brought in June against 36 municipal underwriting firms. Another 22 were charged in September.
All the firms settled and paid civil penalties up to a maximum of $500,000.
“The settlements obtained under the…initiative have brought much-needed attention to disclosure obligations in municipal-bond offerings,” said Andrew Ceresney, director of the SEC’s enforcement division.
The 72 firms make up about 96% of the market share for municipal underwritings, he said, and all have agreed to improve their due diligence procedures.
Firms in Tuesday’s announcement included Barclays Capital Inc., TD Securities LLC and Wells Fargo Bank N.A. Municipal Products Group.
THE WALL STREET JOURNAL
By ANNE STEELE
Feb. 2, 2016 2:46 p.m. ET
Write to Anne Steele at [email protected]