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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23920 / August 24, 2017

Securities and Exchange Commission v. Alan Charles Kapanicas, No. 5:17-cv-01704 (C.D. Cal., filed August 23, 2017)

Former Executive Director of Muni Bond Issuer Charged with Disclosure Failures

The Securities and Exchange Commission announced that, Alan Kapanicas, the former executive director of the Beaumont Financing Authority, has agreed to settle charges that he made false statements about prior compliance with continuing disclosure obligations in five bond offerings.

According to the SEC's complaint filed in the U.S. District Court for the Central District of California, the Beaumont Financing Authority had issued approximately $260 million in municipal bonds in 24 separate offerings from 2003 to 2013 for the development of public infrastructure. For each of those offerings, a community facilities district established by the City of Beaumont, California agreed to provide investors with annual continuing disclosures, including important financial information and operating data. From at least 2004 to April 2013, the district regularly failed to provide investors with the promised information. The Beaumont Financing Authority failed to disclose this poor record of compliance when it conducted the 2012 and 2013 offerings totaling more than $32 million. As a result, the bonds appeared more attractive and investors were misled about the likelihood that the district would comply with its continuing disclosure obligations in the future. The SEC's complaint alleges that Kapanicas reviewed, approved and signed the misleading offering documents.

The SEC's complaint, filed on August 23, 2017, charges Kapanicas with violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. Kapanicas agreed to settle the charges without admitting or denying the allegations, and pay a $37,500 penalty. He also agreed to be barred from participating in any future municipal bond offerings. The settlement is subject to court approval.

The SEC's investigation was conducted by Steven Varholik and Jason H. Lee of the Public Finance Abuse Unit with assistance from Deputy Chief Mark R. Zehner, Jonathan Wilcox, and Creighton L. Papier. The investigation was supervised by Monique C. Winkler.

 

https://www.sec.gov/litigation/litreleases/2017/lr23920.htm


Modified: 08/24/2017