SEC Finds Fraud In Information Posted to City’s Website

    May 2013
    Last week, the Securities and Exchange Commission (SEC) issued a cease and desist order against the City of Harrisburg, Pennsylvania, charging the City with fraud on the basis of misrepresentations and/or omissions in public statements and financial information available on the City’s website during a long period of failure by the City to fully comply with its continuing disclosure obligations. This order marks the first time the SEC has instituted enforcement proceedings against a municipality other than in connection with alleged fraud and negligence in official statements or related disclosure documents prepared for a bond issue. Although the Harrisburg facts are somewhat unique, the SEC’s legal analysis contained in both the order and the report of the investigation that accompanied the order underscore the SEC’s decades long admonitions to municipal issuers and municipal officials to provide ongoing timely and accurate information to the secondary market.