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February 02, 2016 at 09:31 AM
The Securities and Exchange Commission said Tuesday that it levied enforcement actions against 14 municipal underwriting firms for violations in municipal bond offerings.
The actions conclude charges against underwriters under the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative.
The SEC orders and penalty amounts taken Tuesday include:
- Barclays Capital Inc. – $500,000
- Boenning & Scattergood Inc. – $250,000
- D.A. Davidson & Co. – $500,000
- First Midstate Inc. – $100,000
- Hilltop Securities Inc. – $360,000
- Janney Montgomery Scott LLC – $500,000
- Jefferies LLC – $500,000
- KeyBanc Capital Markets Inc. – $440,000
- Mitsubishi UFJ Securities (USA) Inc. – $20,000
- Municipal Capital Markets Group Inc. – $60,000
- Roosevelt & Cross Inc. – $250,000
- TD Securities (USA) LLC – $500,000
- United Bankers’ Bank – $160,000
- Wells Fargo Bank N.A. Municipal Products Group – $440,000
In all, 72 underwriters have been charged under the voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents.
In Tuesday’s actions, the SEC stated that between 2011 and 2014, the 14 underwriting firms sold municipal bonds using offering documents that contained materially false statements or omissions about the bond issuers’ compliance with continuing disclosure obligations.
The SEC also found that the underwriting firms “failed to conduct adequate due diligence to identify the misstatements and omissions before offering and selling the bonds to their customers.”
While not admitting or denying the findings, the 14 firms agreed to cease and desist from such violations in the future. Under the terms of the MCDC Initiative, they will pay civil penalties based on the number and size of the fraudulent offerings identified, up to a cap based on the size of the firm. Each firm also agreed to retain an independent consultant to review its policies and procedures on due diligence for municipal securities underwriting, the SEC said.
