The Securities and Exchange Commission today revealed it has filed a litigated action against Oppenheimer & Co. Inc. and separately filed settlements with BNY Mellon Capital Markets LLC, TD Securities (USA) LLC, and Jefferies LLC. The US regulator charged each firm with failing to comply with municipal bond offering disclosure requirements.
The official announcement noted:
These are the first SEC actions addressing underwriters who fail to meet the legal requirements that would exempt them from obtaining disclosures for investors in certain offerings of municipal bonds.
The SEC detailed that during different periods since 2017, the four companies sold new issue municipal bonds without obtaining required disclosures for investors. Each of them relied on limited offering exemption from the requirements, but the regulator stated that they did not take the necessary steps to satisfy its criteria.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said:
I applaud the excellent work of the Division’s Public Finance Abuse Unit in bringing these first-ever actions in the $4 trillion municipal bond space. We encourage underwriters to examine their practices and to self-report any failures to us before we identify them ourselves.
LeeAnn G. Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit, added:
Disclosure helps protect investors from fraud. Underwriters must take seriously their responsibility to ensure municipal bond investors get the information they are entitled to.
According to the original announcement, BNY, TD, and Jefferies agreed to settle the charges. SEC imposed a $956,833.56 monetary penalty on BNY, a $152,955.92 on TD and Jeffry received a $143,215.22 fine. Further, the three firms agreed to cease and desist from future violations of those provisions and be censured.
Oppenheimer was charged with the same violations in addition to making deceptive statements. The SEC noted it has begun an investigation into the firm’s reliance on the exemption. The regulator is seeking permanent injunctions, disgorgement plus prejudgment interest, and a civil money penalty.