GO
Loading...

Enter multiple symbols separated by commas

SEC and Harrisburg Settle Securities Fraud Charges

SEC insignia
Getty Images

The U.S. Securities and Exchange Commission charged the Pennsylvania city of Harrisburg, the state's beleaguered capital, with securities fraud on Monday for allegedly releasing misleading public statements and financial information.

Harrisburg, which is under state receivership after its finances became mired by a scheme to upgrade a trash incinerator, agreed to settle the charges without admitting or denying the findings, the SEC said.

The SEC said it was the first time it has charged a municipality for making misleading statements outside of securities disclosure documents. Its investigation covered Harrisburg's budget, annual and mid-year financial statements, and a "State of the City" address.

Alongside the charges, the SEC issued a report saying that public officials may be liable under federal securities laws for public statements made in the secondary market for municipal securities.

The SEC said Harrisburg has already implemented "various remedial measures" to prevent future violations.

According to the SEC, investors had to make trading decisions "based on inaccurate and stale information" about Harrisburg's financial condition during the trash burner crisis, largely because the city did not provide annual financial reports and other notices such as interest payment delinquencies.

The SEC has stepped up its scrutiny of the municipal bond market since last summer, when one of its commissioners, Elisse Walter, released a report that had been years in the making that called for stricter regulatory enforcement and increased investor protection.

Last Monday, the SEC accused Victorville, California, of defrauding investors by, in part, giving them false information about the security of bonds used for an airport hangar project. In March, the SEC settled fraud charges with Illinois over allegations that the state repeatedly misled investors about its underfunded pensions.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • Grexit a 'danergous experiment': Larry Summers

    Larry Summers, Harvard University, shares his thoughts on whether Greece can be saved and what would likely happen if Greece left the euro zone.

  • This Day in History, June 30

    On this day in history, in 1953 the first Corvette was manufactured, in 1994 the U.S. Ice Skating Federation bans Tonya Harding for life, and in 2000, President Clinton signs the Electronic Signature Act.

  • Is Tsipras considering last minute deal?

    Greece is on the verge of default as a critical payment comes due today, reports CNBC's Michelle Caruso-Cabrera.