SEC Bars Head of Unregistered Municipal Advisory Firm for Failing to Disclose Material Facts to School District
Sept. 20, 2018
File No. 3-18803
September 20, 2018 - The Securities and Exchange Commission today instituted settled proceedings against an unregistered municipal advisor and its principal for failing to register as a municipal advisor and for failing to disclose material facts about their registration status to a California school district.
According to the SEC's order, in connection with two municipal advisory engagements, Eric Hall and his consulting firm Eric Hall & Associates, LLC (EHA), created the misleading impression that EHA was a registered municipal advisor, when in fact Hall had failed to register the firm under the SEC's final rules. The Commission found that, in 2015, Hall and EHA made multiple representations to their client, a California school district, that EHA was eligible and properly qualified to serve as a municipal advisor in connection with its bond offering. According to the order, although SEC staff contacted EHA about its failure to properly register with the SEC, Hall continued to provide municipal advisory services through 2016 without informing the school district that neither he nor EHA were properly registered.
The SEC's order finds that EHA willfully violated the registration, fiduciary duty, and unfair dealing provisions of Sections 15B(a)(1)(B) and 15B(c)(1) of the Securities Exchange Act of 1934 and Rule G-17 of the Municipal Securities Rulemaking Board, and that Hall willfully violated the fiduciary duty and unfair dealing provisions of Section 15B(c)(1) of the Exchange Act and MSRB Rule G-17 and caused EHA's registration violations under Section 15B(a)(1)(B) of the Exchange Act. Without admitting or denying the SEC's findings, EHA and Hall consented to a cease-and-desist order censuring EHA and barring Hall from association with various regulated entities, including municipal advisors. The order also imposes, jointly and severally on EHA and Hall, payments of $35,520 in disgorgement, $4,241.38 in prejudgment interest, and a $15,000 civil penalty.
The SEC's order arises from research and resulting referral by the staff of the SEC's Office of Compliance Inspections and Examinations, including Mshyka Davis-Smith, Rachelle Galloway, Suzanne McGovern, and Robert Miller. The investigation was conducted by members of the Enforcement Division's Public Finance Abuse Unit, including Bill Salzmann and Monique Winkler.
See also Order: