Securities Litigation

On August 24, the SEC announced settled administrative actions against 71 state and local issuers arising from $3.7 trillion in municipal securities offerings. The Commission alleged the issuers made false statements claiming they had complied with their continuing disclosure obligations under prior debt issues from 2011-2014. Each settled action imposed a cease-and-desist order and compliance undertakings.

The settlements appear to be the last leg of the Commission's Municipal Continuing Disclosure Cooperation ("MCDC") initiative, under which the SEC offered ...

On September 30, the SEC issued its second round of mass settled actions over municipal securities disclosure issues, as part of its Municipal Continuing Disclosure Cooperation ("MCDC") Initiative. In this round, 22 municipal underwriters will undertake remedial measures and pay fines (ranging from $20,000 to $500,000 and totaling $4.12 million) for disclosure violations. Announced in March of 2014, the MCDC Initiative offered structured settlements for municipal underwriters and issuers who voluntarily "came in from the cold" to self-report failures of new bond ...

State or local government entities, special tax districts, hospital districts and other municipal bond issuers face a December 1 deadline to respond to the SEC Enforcement Division's "Municipalities Continuing Disclosure Cooperation Initiative." The MCDC Initiative is part of regulatory and enforcement emphasis on the municipal-securities world resulting from Dodd-Frank. Municipal issuers are supposed to make continuing-disclosure filings of events affecting their outstanding bond issues (financial statements, ratings changes, tax shortfalls, etc.) like SEC ...

Responding to industry complaints, the SEC's Enforcement Division modified its Municipal Continuing-Disclosure Cooperation ("MCDC") Initiative to (a) extend the deadline for issuer disclosures until December 1 (from September 1) and (b) implement a tiered set of caps on fines, more proportional to underwriters' revenues. Announced last March, the Initiative offers standardized terms for settlement of administrative proceedings for those municipal-securities-market participants who admit their participation in securities offerings having mis-stated a public ...