SEC says Miami mislead bond investors

Nathaniel Popper / New York Times News Service /

Published Jul 20, 2013 at 05:00AM

The city of Miami is being accused of breaking its probation for violating securities laws.

The Securities and Exchange Commission filed charges Friday afternoon, accusing the city of giving misleading information about its finances to investors in 2009 in an effort to make its municipal bonds more attractive.

The agency also said that the city had broken a cease-and-desist order it signed in 2003 after facing similar charges.

George Canellos, the co-director of the SEC’s enforcement division, said in a statement that the city’s conduct was “all the more appalling and unacceptable,” because of the earlier problems.

It is the first time a municipality has been accused of violating a cease-and-desist order. The SEC has faced criticism for not levying harsher penalties on repeat offenders.

A lawyer for Miami, Ivan Harris, said the city would fight the charges in court.

“The city made detailed disclosures about these transactions, complied with accounting rules, received clean audits and its bond prices have remained stable throughout this time period,” Harris said. “How the SEC concludes that fraud occurred is a mystery.”

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