SEC Enforcement Action Targets Municipal Securities Market

The Securities & Exchange Commission has been stepping up enforcement actions against individuals accused of wrongdoing in the municipal securities market, a group that is usually not targeted by the SEC.

The SEC Enforces Action Against California’s Municipal Securities Market

The Wetlands Water District of California, which is California’s largest agricultural water district, was fined the largest penalty to-date: $125,000. The case revolved around allegations that the municipal issuer made a decision to cover up a revenue shortfall in advance of a $77 million bond offering in 2012.

In addition to the issuer, the SEC also named Wetlands’ general manager and general counsel, Thomas Birmingham, and his assistant, Louie Ciapponi, over their alleged role in the matter. Birmingham and Ciapponi agreed to pay fines of $50,000 and $20,000, respectively.

The SEC noted that although the men were driven by a “somewhat altruistic desire,” the agency did not want to penalize the water district’s customers with higher rates to make up for the shortfall – their failure to disclose the true financial condition of the district left investors in the dark about the true financial shape of the company.

The SEC also charged individuals in a Rhode Island matter related to Hall of Famer, Curt Schilling, handing out lifetime bans for failing to disclose material information in a problematic debt offering. In doing so, the SEC is sending a message to others that wrongful actions taken by individuals in the municipal securities market will no longer be tolerated.

Were You Wronged By an Individual in the Municipal Securities Market?

If you suffered an investment loss as the result of statements made by someone in the municipal securities arena, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney as soon as possible to discuss your rights.