SEC may charge municipalities with securities fraud based upon failure to provide accurate information related to its financial condition.

The City of Harrisburg consented to the entry of an order instituting cease-and-desist proceedings pursuant to Section 21C of the Securities Exchange Act of 1934. The SEC charged the municipality with material misstatements and omissions in its public statements and financial information during a multi-year period as a pre-requisite to the underwriting of primary offerings of municipal securities; i.e., municipal bonds. For instance, the city was cited for failing to submit annual financial information, audited financial statements and related notices from 2009-2011, despite holding significant outstanding debt obligations.

Case Law Alerts, 3rd Quarter 2013