NOW SHOWING
IN A SECURITIES
MARKET NEAR YOU
DISCLOSURE
NIGHT
OF THE
LIVING DEAD
STARRING
 THE

The Securities and Exchange Commission (SEC)
 THE







LIVING DEAD
LIVING
School Districts
Superintendents
Business managers
Underwriters
Financial Advisors
Bond Attorneys
Dissemination Agents
The road to Issuance & Post Issuance
Bond
Resolution
to Issue
Bonds
Preliminary
Official
Statement
Price Bonds
Bond
Purchase
Agreement
Final Official
Statement
Issue Bonds
Written
Undertaking
The Living must get to a safe place
Official
Statement
• Must be truthful and disclose all material facts
Bond Buyer
Mess Up and the
SEC may bite you
• Purchases relying on statements in the OS
Post
Issuance
Disclosure
• Issuer agrees to
provide in written
undertaking
Secondary
Market
Bond Buyer
Initial Disclosure: Rules


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SEC Rule 15C2-12 obligates underwriters to obtain,
review and distribute to investors copies of the issuer’s
disclosure documents.
Official Statement is Issuer’s Document.
Must be truthful and disclose all material facts. (No
omissions of material facts.)
Post Issuance Disclosure – Secondary Market



Underwriters are obligated to get a written undertaking
from Issuer.
Issuer agrees to provide (1)annual financial information,
audited financial statements with financial and operating
data; and (2) material event notices.
Issuers need to provide on annual basis or disclose
failure.
THOSE WHO DIDN’T MAKE IT

Orange County – failed to disclose risks relating to
investment pools and financial condition (Financial)

Maricopa County, AZ failed to disclose financial condition
and operating cash flow (Financial)

Syracuse, NY falsely claimed surplus for general and debt
service funds (Financial)

Miami, Florida failed to disclose cash flow
shortages(Financial)

Massachusetts Turnpike Authority failed to disclose
substantial cost overruns on “Big Dig” project. (Financial)
MORE OF THOSE WHO DIDN’T MAKE IT



San Diego, CA failed to disclose looming pension fund
crisis. (Pension)
State of New Jersey misleading on public pension funds
(Pension)
2013 West Clark Community Schools, Indiana false
statement relating to improper gifts and gratuities to
school district representatives stated in Official Statement
as cost of issuance.
(Conflict of interst & graft)
DON’T GET BITTEN

2014 – False and Misleading statements in official
statement – originally eight sound stages shrunk to
vocational school. (fraud- disclosed a fact they knew was false)
Only mayor and City administrator knew and did not disclose
 FIRST TIME CITY OFFICIAL fined $10,000 and life ban from
participating in municipal finance
(FINED AND BANNED FROM THE LIVING)

SEC ARE NOW BITERS

The SEC will continue to look for opportunities to hold
individuals personally accountable for their roles in
breaking federal securities laws. The SEC scored a major
first when it charged the mayor of Allen Park, Mich., and
extracted a financial penalty from him for his role in
controlling the city and lower-level personnel who misled
investors with false language in offering documents.

"From my perspective, the most effective deterrent is
individual liability," Andrew Cerney, director of
enforcement said. (Biter)
TOOLS TO STAY
OUT OF WAY OF
THE LIVING DEAD