From the Wall Street Journal, 6 May 2013.
By Debbie Cai
The Securities and Exchange Commission has charged the city of Harrisburg, Pa., with securities fraud for allegedly issuing misleading public statements relating to its financial condition.
This marks the first time the SEC has charged a municipality for misleading statements made outside of its securities disclosure documents, the regulators said in a statement, adding Harrisburg has agreed to settle the charges.
A representative for the city wasn’t immediately available for comment.
The city neither admits nor denies the findings in Monday’s SEC order, according to the SEC’s statement.
Harrisburg is a near-bankrupt city under state receivership largely due to approximately $260 million in debt the city had guaranteed for upgrades and repairs to a municipal resource recovery facility owned by the Harrisburg Authority, according to the SEC.
The SEC found Harrisburg didn’t provide certain ongoing financial information and audited financial statements for investors holding bonds issued or guaranteed by the city. Investors seeking information about the city’s finances for the period between 2009 and 2011 had to seek out Harrisburg’s other public statements for current information. However, very little information about the city’s fiscal situation was publicly available elsewhere, the SEC said.
Information that was accessible on the city’s website such as its 2009 budget, 2009 State of the City address, and 2009 mid-year fiscal report either misstated or failed to disclose critical information about its financial condition and credit ratings, the SEC said.
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