SEC Charges Twenty-two Municipal Bond Underwriting Firms With Fraudulent Disclosures To Investors

By Francine McKennaMarketWatch Pulse

The Securities and Exchange Commission charged twenty-two municipal underwriting firms with selling municipal bonds using materially false statements or omitting required disclosures to investors. They will pay penalties based on the number and size of the fraudulent offerings identified, with a maximum penalty imposed on PNC Capital Markets of $500,000. The SEC's complaint says that between 2010 and 2014, the twenty-two firms, which also include UBS , Fifth Third Securities , BB&T , Mesirow Financial, and Edward D. Jones & Co , also failed to conduct adequate due diligence to identify the misstatements and omissions before offering and selling the bonds to their customers. The firms did not admit or deny the findings, but agreed to cease and desist from such violations in the future. Each firm also agreed to hire an independent consultant to review its policies and procedures on due diligence for municipal securities underwriting. This is the second round of filings against underwriters under the SEC's Municipalities Continuing Disclosure Cooperation Initiative.

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