SEC© Resolves First Case Under New Municipalities Continuing Disclosure Cooperation Initiative

Publisher: Securities Law Perspectives
Author: Mary Hansen and William Carr

On July 8^th, 2014, the SEC© announced a settlement of charges against a CA school district for misleading bond investors about its failure to comply with its continuing disclosure obligations under Rule 15c2-12 of the Exchange Act.

The settlement was facilitated by the MCDC initiative (Municipalities Continuing Disclosure Cooperation Initiative), which is part of the SEC’s goal to bring more oversight into the municipal bond industry. As part of the MCDC Initiative, Kings Canyon Joint Unified School district, without admitting or denying the SEC’s findings agreed to entry of an Order (1) finding that it was in violation of Section 17(a)(2) of the Securities Act, (2) requiring it to cease and desist from violating Section 17(a)(2), (3) requiring it to establish written policies and procedures and to conduct periodic training regarding continuing disclosure obligations, and (4) requiring it to cooperate with the Enforcement Division in any subsequent investigation and to disclose the settlement in future bond offering materials.

The settlement marks the first case of the MCDC Initiative and SEC© oversight on the public finance market. For more information on the settlement, please click here.