In a first for the SEC, on September 15, a federal jury has found a municipality and its former Budget Director liable for violations of federal securities laws by acting “knowingly” or with “severe recklessness” while making representations about the financial condition of the City of Miami during three separate offerings of municipal securities in 2009. The SEC alleged, and the jury agreed that city officials violated federal law when they transferred cash from capital projects—funds that had already been allotted, or were needed to cover ongoing expenses—to mask shortfalls in the city’s general fund in order to convince bond-rating agencies that the city’s finances were better than they really were. Miami had been operating under a 2003 SEC cease-and-desist order based on similar conduct. On September 9, the SEC also reached a settlement agreement with an Oklahoma-based bank to resolve allegations that it failed to detect and alert bond holders as to problems in various municipal bond offerings while acting as indenture trustee. As outlined by the SEC final order, the bank allegedly knew that some of the assisted living facilities serving as collateral for the bonds had been closed, and that an individual had withdrawn investor money from reserve funds for the bond offerings and used such funds for other business ventures and personal expenses. The bank did not admit or deny the SEC’s allegations, but agreed to pay $984,000 in disgorgement, as well as a $600,000 civil penalty.
On November 22, the SEC announced that Wesley R. Bricker will become its Chief Accountant, succeeding James Schnurr who will be retiring this year. Mr. Bricker served under his predecessor as Deputy Chief Accountant since 2015 and has been Interim Chief Accountant since July of this year. As Chief Accountant, Mr. Bricker will be the principal advisor to the Commission on accounting and auditing matters and lead the Commission’s Office of the Chief Accountant. He also will be responsible for assisting the Commission with discharging its oversight of the Financial Accounting Standards Board and the Public Company Accounting Oversight Board.
In conjunction with the SEC’s recent settlement with a U.K.-based pharmaceutical company, the company announced on August 30 that the DOJ has closed its parallel foreign bribery investigation. As detailed here, the SEC settled charges against the company for allegedly improper payments made by its wholly owned subsidiaries in China and Russia. Under the SEC settlement, the company agreed to disgorge $4.325 million and pay a $375,000 civil penalty with $822,000 in prejudgment interest.
On September 8, a California-based software company disclosed in its annual statement that following an investigation into its operations in Russia and certain of the Commonwealth of Independent States, the DOJ and SEC have both declined to bring enforcement actions under the FCPA. An announcement of possible violations was first disclosed in the December 2013 blog post by Roxane Marenberg, Vice President and Deputy General Counsel in the company’s Global Compliance Enablement division. In the post, Marenberg stated that the company was conducting an investigation into alleged FCPA violations at the request of the SEC and DOJ in response to a communication those agencies had received concerning the company’s operations and discounting practices. The company’s disclosures did not provide any further detail about the nature of the business activities being investigated.
On September 7, the SEC named Sarah G. ten Siethoff Deputy Associate Director in the Division of Investment Management’s Rulemaking Office. Since joining the SEC in 2008, Ms. ten Siethoff has served in various roles in the Division’s Rulemaking Office, including Assistant Director, Senior Special Counsel, and Senior Counsel. In her new role, Ms. ten Siethoff will, among other things, recommend rulemaking and other policy initiatives under the Investment Company and the Investment Advisers Acts of 1940. Prior to joining the SEC in 2008, Ms. ten Siethoff worked as an associate in private practice.