The Impact of SEC Enforcement on Public Finance
Andrew J. Ceresney, Director, Division of Enforcement
Oct. 13, 2016
Keynote Address at Securities Enforcement Forum 2016
Good afternoon and thank you for that very kind introduction. It’s a pleasure to speak with you all today. Before I start, I must give our standard disclaimer that the views I express today are my own and do not necessarily reflect the views of the Commission or its staff.
Today I am going to talk about the Commission’s enforcement efforts in the area of public finance. Public finance, and the municipal securities market in particular, is a critically important area, and one on which the Enforcement Division needs to be, and has been, focused over the last few years. Our numerous recent enforcement actions have resulted in significant changes in the public finance market, where the Commission has brought many first-of-their-kind actions and used a range of legal theories and remedies.
I thought I would start my remarks today with some background on the public finance market and discuss the historical context of our actions in the public finance area. Then, I will focus on the Commission’s current efforts in this space to expose and address misconduct in this market. Finally, I will discuss the effects that the Commission’s efforts have had on the public finance market and the behavior of market participants.
Background on the Public Finance Marketplace
From the perspective of the Division of Enforcement, the public finance market is essentially divided into two significant areas – municipal securities and public pensions.
The municipal securities market consists of securities valued at over $3.7 trillion. One overriding characteristic of this market is its diversity. Issuers of municipal securities range from the nation’s largest states, counties and cities, to the smallest towns and school districts. They include not only political subdivisions like state and local governments, but also public authorities that operate housing, airports, power plants, water sources, and other community services. The number of municipal issuers in the United States is estimated to be about 44,000, compared to approximately 8,600 corporate issuers. And the securities they issue are extremely varied in their credit structures; it is estimated that there are over 1 million different municipal bonds outstanding compared to 60,000 corporate bonds. And in 2015 alone, there were over 14,000 new municipal bond issues.
What is not evident from these figures is how critical the municipal bond market is to funding the nation’s infrastructure and, in turn, how important it is to our day-to-day lives. State and local governments issue municipal securities to finance a wide variety of public projects, to provide cash flow for government needs, and to fund non-profits such as hospitals and colleges. In short, municipal bonds touch every aspect of our lives: if your children attend a public school or a university; if you have been treated at a local hospital; if you have visited a library, park or sports facility; if your parents reside in an assisted living facility; if you took the subway, or drove on roads or bridges or through a tunnel today; even if you turned on your tap water this morning, you are likely seeing the tangible results and benefits of the municipal securities marketplace.
And on the investor side, what is somewhat distinctive about this market is that municipal bonds are held largely by retail investors who hold the bonds either directly or through mutual funds. Estimates are that as much as 69% of outstanding bonds are held directly or indirectly by retail investors.
Despite its importance, this market is substantially less regulated than many others. Municipal securities are exempt from the registration and reporting requirements of the federal securities laws and municipal issuers therefore are not required to file offering materials, or quarterly or annual reports, with the Commission. The Municipal Securities Rulemaking Board establishes rules, which the SEC reviews, approves and, along with FINRA, enforces, for the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. But investors in municipal bonds are often not afforded access to the types of timely and accurate information available to investors in other markets.
Additionally, municipal bonds are not traded on any exchange; they trade only in a decentralized, over-the-counter dealer market. This secondary market is relatively opaque and investor access to pre-trade pricing information has historically been very limited. The lack of transparency can make it difficult for investors to ascertain whether they are getting a fair price. Indeed, one study has demonstrated that muni bond investors pay more in markups and other transaction costs than investors in other securities. As former SEC Chairman Elisse Walter observed, investors in municipal securities are, in certain respects, afforded “‘second-class treatment’ under current law.” In part, the lack of protection afforded to investors in municipal securities led Chair Mary Jo White to reaffirm that “protecting our municipal securities markets and investors must be a priority.” This makes Enforcement’s role in protecting investors in this area especially important.
Another key area of the municipal securities market is public pension funds. Everyone here probably knows someone who is relying on a public pension fund for their retirement. These include teachers, firefighters, police officers, town clerks, and librarians, to name a few. The current issues in public pension funding and the impact on state and local government finances are beyond the scope of my remarks today. But the Enforcement Division primarily is focused on two areas that impact public pensions – accurate disclosure of pension fund liabilities, and public corruption, such as pay-to-play and other schemes in the investment and safeguarding of public pension fund assets.
Accurate disclosure of pension fund liabilities is critical to ensure that investors have adequate information to evaluate the impact of pension fund liability on an issuer’s overall financial condition. A focus on pay-to-play abuses in this space also is critical because there is a lot at stake: Public pension funds in the United States hold over $3.8 trillion of assets, and the opportunity to earn fees to manage and custody those assets therefore is very valuable. Government officials are typically responsible for selecting the investment professionals who will earn those fees. If political contributions or improper payments to government officials play a role in the selection of investment professionals, the fairness of the process by which public contracts are awarded is undermined. These practices, known as “pay-to-play,” also distort the process by which professionals are selected and may result in pension funds receiving inferior services and paying higher fees, thereby harming retirees and the taxpaying residents of the states.
A Specialized Approach to Securities Enforcement in Public Finance
Since 2009, and even prior, SEC Commissioners have been sounding the alarm about the risk of abuses in the public finance area. Over time, there have been some important enforcement matters dealing with public finance, including actions against Orange County in 1996, the yield burning cases of the late 1990’s, the City of San Diego in 2006, and actions involving Jefferson County, Alabama in 2008. But this area has lacked sustained enforcement attention and the development of deep expertise regarding abuses in public financing.
In 2010, we created a specialized Enforcement unit to address abuses in this area. As noted when the unit was announced, its focus was to be on misconduct in the large municipal securities market and in connection with public pension funds including: offering and disclosure fraud; tax or arbitrage-driven fraud; pay-to-play and public corruption violations; public pension accounting and disclosure violations; and valuation and pricing fraud. The Enforcement Division staffed the unit with experienced attorneys and hired non-attorney specialists with real world experience in the public finance industry to provide training and to assist in enforcement investigations. The unit, which we recently renamed the Public Finance Abuse Unit to recognize its broad scope and role, also partners with the Commission’s Office of Municipal Securities. In addition, the expertise developed within the Unit has been leveraged by professionals working in other groups within Enforcement, who have brought significant cases as well.
And today it is clear that, by every measure, the investment made in 2010 has paid off in a big way. Since that time, and increasing substantially in the last few years, the Division has focused on enforcement in the public finance arena and has had a clear, measurable impact in this area.
Increased Enforcement Activity in Public Finance
While numbers tell a small part of the story, they provide some context for the marked increase in activity. The Commission is bringing actions against more municipal issuers and public officials. For example, since the beginning of 2013, the Commission has brought enforcement actions against 76 state or local government entities (including 4 U.S. states), 13 obligated persons and 16 public officials. In contrast, for the entire 10 year period from 2002 to 2012, there were enforcement actions brought against 6 government entities, 6 obligated persons and 12 public officials.
I’d like to focus on a few of the cases that exposed serious misconduct in the opaque public finance area, and then turn to some of the legal theories and remedies used in the Commission enforcement actions. The action brought against broker-dealer Edward Jones in August 2015 is a good example of a pathbreaking case. As described in that settled order, in underwriting municipal bonds, dealers are required to offer bonds to their customers at an initial offering price which has been negotiated with the issuer. This is intended to make sure investors pay the price at which the issuer intends to sell the bonds and also limits the underwriter’s compensation. The Commission’s settled order against Edward Jones described how, instead of selling the bonds to its customers, Edward Jones was taking them into its own inventory and then selling the bonds to its customers at a markup. This practice had the dual effect of overcharging its retail customers by at least $4.6 million and also put issuers at risk of losing valuable tax subsidies. In all, to settle the charges, Edward Jones paid a little more than $20 million in disgorgement and civil penalties. This Enforcement action revealed a markup practice in this space which previously was not commonly known to the market, prompting an industry debate about whether Edward Jones’ actions indicated a systemic problem or an aberration and whether changes are needed in industry practices on the pricing of new bonds.
The Commission’s recent settled matter against State Street Bank and Trust Company is another example of the significant Enforcement efforts in this area. This case involved a pay-to-play scheme in a corner of the market where such schemes had not been previously found – custodial services for public pension funds. Like most large institutional investors, pension funds require a custodian to hold their assets and effect settlement of securities transactions. In two settled orders, the Commission found that State Street and its then-senior vice president entered into an agreement with the State of Ohio’s then-deputy Treasurer to make illicit campaign contributions and payments in exchange for State Street being awarded contracts to serve as subcustodian for three Ohio pension funds. While most of the Commission’s pay-to-play cases in the pension fund space have been brought against investment advisers, this case revealed that opportunities for pay-to-play also exist in other areas of public finance. To resolve the action, State Street agreed to pay $12 million in disgorgement, prejudgment interest and civil penalties, and its former vice president paid approximately $250,000. The Commission’s litigated action against a lobbyist in this matter is still pending in Federal district court and alleges that he caused campaign contributions to be made on behalf of State Street to the Treasurer of the State of Ohio to influence the Treasurer’s office to select and retain State Street.
And, we continue to pursue investment frauds that use municipal securities or other public finance instruments as vehicles for the schemes. For example, in November of 2015, we announced fraud charges and an emergency asset freeze obtained against Christopher Brogdon, whom we allege amassed nearly $190 million through dozens of municipal bond and private placement offerings but secretly diverted investor money to other business ventures and personal expenses.
Using Sweeps to Reveal and Address Widespread Misconduct
One approach that the Enforcement Division has taken to leverage our resources and increase our effectiveness in this area is to conduct enforcement sweeps. A sweep is a group of enforcement actions brought simultaneously against different parties who have engaged in similar violations. Sweeps can be particularly effective where there is widespread misconduct. And it is fair to say that our sweeps have revealed widespread misconduct in some significant areas of the municipal securities market.
Our most prominent sweep has been our MCDC initiative. MCDC stands for the Municipalities Continuing Disclosure Cooperation Initiative. It is the first self-reporting initiative undertaken by the Enforcement Division since the 1970s. The initiative was designed to address what the Division perceived was likely a widespread problem in the market: municipal issuers had undertaken in their offerings to provide investors with important financial and other information – known as “continuing disclosure” – but were failing to provide that information in a timely fashion, or sometimes, failing to provide it at all. Then, when the municipal issuers went back to market to offer new bonds, they were falsely telling potential new investors that they had fully complied with their disclosure obligations. The Enforcement Division was also concerned that underwriters were failing to conduct sufficient due diligence on the representations made by the issuers and were selling bonds to their customers using offering materials that contained false statements. The program, announced by the Commission in 2014, offered standard settlement terms to municipal issuers and underwriters who had conducted offerings which included these kinds of false statements. To encourage participation, the terms of the standard settlements were more lenient than those that would have been imposed in a litigated action, and included only negligence-based charges, with reduced civil penalties for underwriters and no civil penalties for issuers.
The initiative prompted a large number of underwriters and issuers to conduct self-reviews and to self-report potential misconduct. In our review of the submissions, the Enforcement Division found widespread failures of due diligence by underwriters. While not every self-report resulted in an enforcement action, the Commission charged 72 broker-dealers, representing about 96% of the market for municipal underwriting. And, this past August, the Commission charged 71 municipal issuers for making false statements or misleading omissions in their bond offering documents. The issuer-respondents included a broad range of issuers and obligated persons from 45 states, including small issuers (such as towns, school districts and charter schools), larger issuers (such as states and large state-level agencies such as transportation departments and housing agencies), and a diverse set of obligated persons (including hospitals, universities, and an assisted living community). This initiative exposed widespread misconduct and has had a significant impact on the market, which I will discuss later in my remarks.
In addition, the Enforcement Division successfully used the sweep technique to raise industry awareness of an important investor protection rule that had not previously been charged in a Commission enforcement action. In November 2014, the Commission charged 13 broker dealers who had engaged in misconduct in the sale of certain Puerto Rico junk bonds to retail investors. A little background here: You have probably heard about Puerto Rico’s debt crisis, including its recent historic defaults. But before all that, in March 2014, Puerto Rico went to market to sell $3.5 billion in bonds. That offering was, and still is, the largest junk-rated municipal bond offering in US history. Due to the risks, the offering was generally considered appropriate for large institutional investors, not retail purchasers. And consistent with that risk, the offering prescribed what is known as a “minimum denomination,” which prohibited the sale of the bonds in lots of less than $100,000. The purpose of this kind of restriction is to discourage dealers from selling potentially unsuitable bonds to small, typically retail, investors, and the MSRB has a rule which prohibits broker dealers from making those sales.
Enforcement staff recognized the risk that dealers might try to sell the bonds to their customers in retail-size lots. So, when the offering went to market, the enforcement staff was surveilling the trading, which allowed us to immediately identify violations by a number of broker-dealers, i.e., sales below the minimum denominations. The Commission then brought a sweep of settled enforcement actions against the dealers, each of whom agreed to pay civil penalties and to improve their policies and procedures. I’m also pleased to note that FINRA has recently increased its enforcement of the rule and subsequently filed actions against a number of dealers for similar violations.
Additional Theories and Remedies Used in Recent Public Finance Matters
Beyond sweeps, many recent Commission enforcement actions in the public finance space represent important enforcement “first-of-their-kind” actions, which show our commitment to use the legal theories and remedies available to us.
Enjoining Bond Offerings
A powerful enforcement tool available to the Commission is the ability to seek a temporary restraining order if we believe investors are in imminent danger of harm. This tool is frequently used, but the Commission had never employed it against a municipal issuer. That changed in 2013, when the Enforcement Division was investigating certain bond offerings by the City of Harvey, Illinois. As a result of the Enforcement investigation, the Commission alleged that, for the previous few years, the city and its former comptroller had engaged in a scheme to divert the proceeds of bond offerings for improper, undisclosed uses. The complaint also alleged that the City had been issuing bonds for the purported development of a hotel, and the property tax increases resulting from that hotel were supposed to be a source of repayment for investors. However, the Commission alleged that, without informing investors, city officials diverted at least $1.7 million of bond proceeds from these offerings to pay the city’s operational costs, such as payroll. During the investigation, the Enforcement Division learned that the City was about to issue similarly structured bonds, this time to fund the development of a supermarket.
The Division’s view was that investors in the new offering were at high risk of having their funds misused. So, with Commission approval, we sought emergency relief in federal court to enjoin the offering until certain safeguards could be put in place. After a hearing, the City agreed to a temporary restraining order barring it from offering any bonds for a period of time. The matter was resolved in December 2014 when the City agreed to a final judgment which prohibited it from offering any municipal bonds for three years unless, among other things, it retained independent disclosure counsel. This case sent an important message – the Division is committed to ensuring that we are as effective in the municipal space as we are in the corporate space.
Penalties Against Municipal Issuers
Another area where we have changed the landscape involves penalties against issuers of municipal bonds. Although the Commission historically has not sought penalties against municipal issuers, that has changed in recent years. Let me discuss the three cases to date where we determined that civil penalties were appropriate.
The first instance involved settled charges against a public facilities district in the state of Washington. In November 2013, the Commission found the issuer had misled investors in an offering to finance the construction of a regional events center by, among other things, falsely stating that there had been no independent reviews of the financial projections for the events center. In fact, an independent consultant twice had examined the projections and raised questions about the center’s economic viability. In a “first” for the Commission, a civil penalty was imposed against the issuer, which due to the nature of that issuer, could be paid from the user fees generated by the event center rather than taxpayer funds.
Then, in March 2016, the Commission charged California’s largest agricultural water district for misleading investors about its financial condition in connection with a $77 million bond offering in 2012. In a settled order, the Commission found that the district engaged in extraordinary accounting transactions which masked a decrease in revenue caused by the drought, and which were designed to avoid the negative consequences of failing to meet its debt coverage ratio. In that settled matter, the district agreed to pay a civil penalty of $125,000, which also could be paid from user fees without directly impacting taxpayers.
And finally, in the recent City of Miami matter, we are seeking a substantial civil penalty against the City after prevailing in a federal jury trial against it and its former budget director. The jury in that case found that the defendants engaged in fraud in connection with three bond offerings totaling more than $150 million. The defendants failed to disclose that they had engaged in a shell game by using certain funds from restricted and other funds to inflate the general fund. I note that the conduct at issue in this matter includes an egregious violation and the City is a recidivist violator whose conduct violated a prior cease-and-desist order issued by the Commission in 2003 for similar violations.
These cases demonstrate that municipal issuers should not expect a pass on civil penalties. Enforcement will scrutinize the nature of the issuer and the sources of funds available to pay a penalty and, with Commission approval, seek penalties where appropriate. And in particularly egregious cases, we will pursue penalties even when the source of those funds is the taxpayer base.
Controlling Person Liability And Conduct-Based Injunctions Against Public Officials
Another area where Enforcement has increased its focus is on municipal issuer officials. Today we are increasingly holding those people accountable where they engage in violations, and where necessary, we are using new approaches and remedies to do so.
For example, controlling person liability under Section 20(a) of the Exchange Act can be used to hold public officials responsible based on their control of the municipal entity that engaged in the fraud. While the Commission has used controlling person liability for many years in the corporate context, it was used for the first time in the municipal securities context against the former mayor of the City of Allen Park, Michigan. In that matter, the Commission charged the City and two former city leaders – the City’s former mayor and former city administrator – in connection with a municipal bond offering to support a movie studio project within the city. The Commission alleged that the former city administrator had full knowledge of the negative undisclosed information and prepared, reviewed, and approved the misleading offering documents. But, as to the former mayor, who had the authority to direct the management and policies of the City and its administrator, the Commission alleged only that he was a champion of the project and knew some of the negative information. Notably, the Commission alleged that the former mayor was liable as a controlling person under Section 20(a) of the Exchange Act, based on his authority and control over the municipality.
More recently, we alleged controlling person liability as the sole theory of liability against a sitting mayor. In the City of Harvey matter, the Commission alleged that the mayor of Harvey was liable as a controlling person based on his control over the City’s operations and his role in signing the allegedly fraudulent bond offering documents. I expect that the Enforcement Division will seek to continue using this theory of liability in appropriate cases.
The Enforcement Division has also been tailoring the remedies sought against municipal issuer executives to increase their effectiveness. So, in addition to seeking the standard “obey the law” injunction, the Division is increasingly seeking Commission authority to seek injunctions that specifically prevent issuer officials from participating in future municipal bond offerings. In the City of Harvey case I just mentioned, the sitting mayor agreed to a consent order enjoining him from participating in any municipal bond offerings in the future. In a recent action involving the operator of a charter school, the Commission obtained a settlement with the former president of the issuer in which he was enjoined from future participation in any municipal bond offering. And in an action against a Rhode Island economic development agency, the Commission obtained injunctions against two former executives of that agency to prohibit them from participating in future bond offerings. This is a strong remedy that I believe the Division will continue to seek in appropriate cases and that should serve as a significant deterrent to state and local officials and other executives at municipal issuers.
The past year has also been notable in that the Commission brought its first enforcement actions against its newest class of registrants: municipal advisors.
First, some quick background on municipal advisors. Generally, municipal advisors provide advice to municipal entities or obligated persons with respect to municipal financial products or the issuance of municipal securities, or undertake certain solicitations of municipal entities or obligated persons. In other words, their clients are municipal issuers, who rely on them to provide advice about when and how to issue municipal securities. Starting in 2010, the Dodd-Frank Act imposed registration requirements on municipal advisors and required them to comply with regulations issued by the MSRB. In addition, the Dodd-Frank Act established that municipal advisors owe a fiduciary duty to their municipal clients and prohibited municipal advisors from engaging in fraudulent, deceptive or manipulative practices. The new registration requirements and regulatory standards were intended to mitigate some of the problems observed with the conduct of some municipal advisors, including failure to place the duty of loyalty to their municipal entity client ahead of their own interests, undisclosed conflicts of interest, and advice rendered by advisors without adequate training or qualifications.
In the first case to enforce the Dodd Frank fiduciary duty, the Commission charged registered municipal advisor Central States, LLC, and three of its employees, with breaching their fiduciary duties and violating certain MSRB rules. In a settled order, the Commission found that, while Central States was acting as municipal advisor to a city for three bond offerings in 2011, its employees failed to disclose to city officials that Central States’ employees were also providing the underwriting services for the same offerings. In a second settled order, the Commission charged two California-based municipal advisory firms and their executives with using deceptive practices when soliciting the business of five California school districts.
These actions should bring attention to the obligations and duties of municipal advisors. And the Enforcement Division hopes that they will raise awareness among issuers and public officials that their municipal advisors owe them both a duty of loyalty and a duty of care, and that they should not be satisfied with anything less.
Coordination with Criminal Authorities
Finally, another area where Enforcement has increased its focus is in our parallel coordination with criminal authorities on public finance matters. A recent case involving the Town of Ramapo, N.Y. is a good example. In that litigated matter, which is still pending, the Commission alleged that Ramapo, N.Y., its local development corporation, and four town officials hid from investors the deteriorating financial situation caused by the construction of a baseball stadium and the town’s declining tax revenues. The Commission also alleged that the Ramapo officials hid the financial distress by manipulating the town’s primary operating fund to falsely depict positive balances during a six-year period when the town had actually accumulated deficits. The Commission further alleged that those inflated general fund balances were used in offering materials for 16 municipal bond offerings by Ramapo and the local development corporation. We coordinated closely with the criminal authorities in this case and, in a parallel criminal action, the U.S. Attorney’s Office for the Southern District of New York brought securities and wire fraud charges against two of the individuals that are defendants in the Commission’s case.
In addition, as part of the Enforcement Division’s focus on pay-to-play abuses in both the municipal securities and public pension contexts, we have been increasing our parallel coordination with specialized public corruption and public integrity units within U.S. Attorneys’ Offices and with the FBI. Our sense is that, where public officials are engaging in public corruption in other contexts – say, in hiring practices or awarding construction contracts – we may also find there is corruption in the awarding of underwriting business or investment advisory contracts for public pension funds. I can’t say today what those efforts will yield, but we are doing all we can to shine light in this opaque area.
Impact on Market and Market Participants
To close today, I want to talk a little about the impact that the Commission’s actions in the public finance space have had on the market. Like private equity, where I recently discussed the impact of Enforcement actions on the market, I believe that Enforcement efforts in the public finance space have changed behavior in some important respects. For example, there are many indications that issuers are increasing their compliance with continuing disclosure obligations. In the months following the announcement of the MCDC initiative in 2014, issuer submissions to the MSRB’s Electronic Municipal Market Access (EMMA) system increased dramatically. I believe that this was due to issuers making filings in order to correct delinquencies that they identified as a result of MCDC. The increase in continuing disclosure filings in EMMA continued into 2015, with the total filings in EMMA significantly exceeding the pre-MCDC levels.
More generally, the Commission’s focus on abuses in the public finance area has raised awareness among market participants about their obligations under the securities laws. In response to the MCDC Initiative and other enforcement actions, the Enforcement Division is hearing from all corners that there is a renewed focus on disclosure by issuers, underwriters and public finance lawyers.
I am pleased that the industry has taken notice. In fact, one municipal securities industry commentator recently observed of the last 3½ years that “[t]here is a definite change in tone.” I am here to say that this change in the tone of Enforcement is here to stay. You can expect continued activity in this area to protect investors.
I hope my speech today has given you a better sense of the SEC’s recent enforcement work in the public finance area. Thank you for your attention, and enjoy the rest of the conference.
 The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author’s colleagues on the staff of the Commission.
 See Securities and Exchange Commission, Report on the Municipal Securities Market (July 31, 2012), available at https://www.sec.gov/news/studies/2012/munireport073112.pdf; Financial Industry Regulatory Authority (FINRA), Trade Reporting And Compliance Engine (TRACE) data (Sep. 2016).
 See EMMA Market Statistics, Municipal Securities Rulemaking Board, available at http://emma.msrb.org/MarketActivity/ViewStatistics.aspx.
 Federal Reserve Board, “Financial Accounts of the United States” Table L.212 (Second Quarter 2016), available at http://www.federalreserve.gov/releases/z1/Current/z1.pdf.
 Lawrence E. Harris & Michael S. Piwowar, Secondary Trading Costs in the Municipal Bond Market, 61 J. Fin. 1361, 1393 (June 2006).
 Commissioner Elisse B. Walter, U.S. Secs. & Exch. Comm’n, Regulation of the Municipal Securities Market: Investors are Not Second Class Citizens (Oct. 28, 2009), available at https://www.sec.gov/news/speech/2009/spch102809ebw.htm (citing Chairman Christopher Cox, Integrity in the Municipal Market (July 18, 2007), available at https://www.sec.gov/news/speech/2007/spch071807cc.htm).
 Chair Mary Jo White, U.S. Secs. & Exch. Comm’n, Statement at Opening Meeting – Municipal Advisors and Pay Ratio Disclosure (Sept. 18, 2013), available at https://www.sec.gov/News/PublicStmt/Detail/PublicStmt/1370542566073.
 U.S. Census Bureau, Annual Survey of Public Pensions: State- and Locally- Administrated Defined Benefit Data Summary Brief: 2015 (June 2016), available at https://www.census.gov/content/dam/Census/library/publications/2016/econ/g15-aspp-sl.pdf.
 See, e.g., Commissioner Daniel M. Gallagher, U.S. Secs. & Exch. Comm’n, A Watched Pot Never Boils: The Need for SEC Supervision of Fixed Income Liquidity, Market Structure and Pension Accounting (March 10, 2015), available at https://www.sec.gov/news/speech/031015-spch-cdmg.html; Commissioner Luis A. Aguilar, U.S. Secs. & Exch. Comm’n, Statement on Making the Municipal Securities Market More Transparent, Liquid and Fair, (Feb. 13, 2015), available at https://www.sec.gov/news/statement/making-municipal-securities-market-more-transparent-liquid-fair.html; Commissioner Michael S. Piwowar, U.S. Secs. & Exch. Comm’n, Remarks at the 2014 Municipal Finance Conference presented by The Bond Buyer and Brandeis International Business School (Aug. 1, 2014), available at https://www.sec.gov/News/Speech/Detail/Speech/1370542588006; Chair Mary Jo White, U.S. Secs. & Exch. Comm’n, Intermediation in the Modern Securities Markets: Putting Technology and Competition to Work for Investors (June 20, 2014), available at https://www.sec.gov/News/Speech/Detail/Speech/1370542122012; Chairman Mary L. Schapiro, U.S. Secs. & Exch. Comm’n, Remarks at Investment Company Institute 2010 General Membership Meeting (May 10, 2010), available at https://www.sec.gov/news/speech/2010/spch050710mls.htm; Arthur Levitt Jr., Muni Bonds Need Better Oversight, (May 9, 2009), available at http://www.wsj.com/articles/SB124182780923802551.
 Litigation Release No. 14792, SEC Initiates Actions in Orange County Investigation (Jan. 24, 1996), available at https://www.sec.gov/litigation/litreleases/lr14792.txt.
 Press Release 2006-191, SEC Sanctions the City of San Diego for Fraudulent Municipal Bond Offerings and Orders the City to Retain an Independent Consultant (Nov. 14, 2006), available at https://www.sec.gov/news/press/2006/2006-191.htm.
 Press Release 2009-232, J.P. Morgan Settles SEC Charges in Jefferson County, Ala. Illegal Payments Scheme (Nov. 4, 2009), available at https://www.sec.gov/news/press/2009/2009-232.htm; Press Release 2008-69, SEC Charges Birmingham Mayor and Friends for Undisclosed Payment Scheme in Municipal Bond Deals (April 30, 2008) available at https://www.sec.gov/news/press/2008/2008-69.htm.
 An “obligated person” generally means any person or entity that is committed by contract or other arrangement to support payment of all or part of the obligations on the municipal securities being offered. See 17 C.F.R. § 240.15c2-12(f)(10).
 Press Release 2015-16, Edward Jones to Pay $20 Million for Overcharging Retail Customers in Municipal Bond Underwritings (Aug. 13, 2015), available at https://www.sec.gov/news/pressrelease/2015-166.html.
 Jack Casey, Woodell Hopes to Start New Initiatives During Tenure as MSRB Chair, The Bond Buyer (Sept. 30, 2016), available at http://www.bondbuyer.com/news/markets-people/woodell-hopes-to-start-new-initiatives-during-tenure-as-msrb-chair-1114829-1.html; Yvette Shields, Edward Jones Quits Negotiated Muni Bond Business, The Bond Buyer (Oct. 23, 2015), available at http://www.bondbuyer.com/news/markets-sell-side/edward-jones-quits-negotiated-muni-bond-business-1087663-1.html.
 See, e.g., Press Release 2012-88, SEC Charges Former Detroit Officials and Investment Adviser to City Pension Funds in Influence Peddling Scheme (May 9, 2012), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171488986.
 Press Release 2015-264, Atlanta Businessman Charged in Nursing Home Investment Scheme (Nov. 20, 2015), available at https://www.sec.gov/news/pressrelease/2015-264.html.
 Press Release 2014-156 SEC Enforcement Division Modifies Municipal Disclosure Initiative (July 31, 2014), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542578459; Statement by Division of Enforcement, Municipalities Continuing Disclosure Cooperation Initiative (Mar. 10, 2014), available at https://www.sec.gov/divisions/enforce/municipalities-continuing-disclosure-cooperation-initiative.shtml.
 Alma M. Angotti, Mark B. Lewis, & William R. McLucas, Common Sense, Flexibility and Enforcement of the Federal Securities Laws, 51 Bus. Law. 1221, 1224-1226 (Aug. 1996) (describing “voluntary disclosure program” announced in 1975 in which public companies that might have made undisclosed foreign payments were invited to conduct their own internal investigations and report the results to the SEC).
 Press Release 2014-46, SEC Launches Enforcement Cooperation Initiative for Municipal Issuers and Underwriters (Mar. 10, 2014), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370541090828.
 Press Release 2016-18, SEC Completes Muni-Underwriter Enforcement Sweep (Feb. 2, 2016) available at https://www.sec.gov/news/pressrelease/2016-18.html; Press Release 2015-220, SEC Sanctions 22 Underwriting Firms for Fraudulent Municipal Bond Offerings (Sept. 30, 2015), available at https://www.sec.gov/news/pressrelease/2015-220.html; Press Release 2015-125, SEC Charges 36 Firms for Fraudulent Municipal Bond Offerings (June 18, 2015), available at https://www.sec.gov/news/pressrelease/2015-125.html.
 Press Release 2016-166, SEC Charges 71 Municipal Bond Issuers in Muni Bond Disclosure Initiative (Aug. 24, 2016), available at https://www.sec.gov/news/pressrelease/2016-166.html.
 Press Release 2014-246, SEC Sanctions 13 Firms for Improper Sales of Puerto Rico Junk Bonds (Nov. 3, 2014), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370543350368 (“Puerto Ricon Bonds”).
 Michelle Kaske & Bill Faries, Debt Choked Puerto Rico at Fiscal Brink as Bond Buyers Pull Back, Bloomberg (May 17, 2015), available at http://www.bloomberg.com/news/articles/2015-05-17/debt-choked-puerto-rico-at-fiscal-brink-as-bond-buyers-pull-back.
 Christine Albano, Aggressive Buyers Ready to Devour P.R. GOs, The Bond Buyer (Mar. 7, 2014), available at http://www.bondbuyer.com/issues/123_46/aggressive-buyers-ready-to-devour-pr-gos-1060525-1.html.
 Municipal Securities Rulemaking Board (MSRB) Rule G-15(f), Confirmation, Clearance, Settlement and Other Uniform Practice Requirements with Respect to Transactions with Customers, available at http://www.msrb.org/Rules-and-Interpretations/MSRB-Rules/General/Rule-G-15.aspx.
 Puerto Ricon Bonds, supra note 29.
 See, e.g., FINRA Letter of Acceptance, Waiver and Consent No. 2014041851101, Re: Stifel, Nicolaus & Company, Incorporated (Mar. 24, 2016) available at http://disciplinaryactions.finra.org/Search/ViewDocument/65955; FINRA Letter of Acceptance, Waiver and Consent No. 2014039380801, Re: Stoever, Glass & Company, Inc. (Jan. 13, 2016) available at http://disciplinaryactions.finra.org/Search/ViewDocument/63989; FINRA Letter of Acceptance, Waiver and Consent No. 2014041832801, Re: Oppenheimer & Co. Inc. (Dec. 22, 2015) available at http://disciplinaryactions.finra.org/Search/ViewDocument/63888.
 Press Release 2014-122, SEC Obtain Court Order to Halt Fraudulent Bond Officer by City of Harvey, Ill. (June 25, 2014), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542163027.
 Litigation Release No. 23149, City of Harvey Agrees to Settle Charges Stemming from Fraudulent Bond Offering Scheme (Dec. 5, 2014) available at https://www.sec.gov/litigation/litreleases/2014/lr23149.htm.
 Press Release 2016-43, California Water District to Pay Penalty for Misleading Investors (Mar. 9, 2016), available at https://www.sec.gov/news/pressrelease/2016-43.html.
 The Greater Wenatchee Regional Events Center Public Facilities District, et al., Securities Act Release No. 9471 (Nov. 5, 2013), available at https://www.sec.gov/litigation/admin/2013/33-9471.pdf.
 Press Release 2016-43, California Water District to Pay Penalty for Misleading Investors (Mar. 9, 2016), available at https://www.sec.gov/news/pressrelease/2016-43.html.
 Westlands Water District, et al., Securities Act Release No. 10053 (Mar. 9, 2016) available at https://www.sec.gov/litigation/admin/2016/33-10053.pdf.
 Press Release 2013-235, SEC Charges Municipal Issuers in Washington’s Wenatchee Valley Region for Misleading Investors (Nov. 5, 2013), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540262235.
 City of Miami, Florida, Exchange Act Release No. 47552 (Mar. 21, 2003), available at https://www.sec.gov/litigation/opinions/33-8213.htm.
 Press Release 2014-249, SEC Charges Allen Park, Mich. And Two Former City Leaders in Fraudulent Muni Bond Offering for Movie Studio Project (Nov. 6, 2014), available at https://www.sec.gov/News/PressRelease/Detail/PressRelease/1370543373355.
 Press Release 2016-93, Mayor in Illinois Settles Muni Bond Fraud Charges (May 19, 2016), available at https://www.sec.gov/news/pressrelease/2016-93.html.
 Press Release 2016-125, Former CEO of Chicago Charter School Operator Settles Muni Bond Fraud Charges (June 21, 2016), available at https://www.sec.gov/news/pressrelease/2016-125.html.
 Press Release 2016-37, SEC Charges Rhode Island Agency and Wells Fargo with Fraud in 38 Studios Bond Offerings (Mar. 7, 2016), available at https://www.sec.gov/news/pressrelease/2016-37.html.
 15 U.S.C. § 78o-4(b).
 Press Release 2016-54, Municipal Advisor Charged for Failing to Disclose Conflict (Mar. 15, 2016), available at https://www.sec.gov/news/pressrelease/2016-54.html.
 Central States Capital Markets, LLC, et al., Exchange Act Release No. 77369 (Mar. 15, 2016), available at https://www.sec.gov/litigation/admin/2016/34-77369.pdf.
 Press Release 2016-118, SEC: Muni Advisors Acted Deceptively with California School Districts (June 13, 2016), available at https://www.sec.gov/news/pressrelease/2016-118.html.
 Press Release 2016-68, SEC: Town Official in New York Hid Troubles From Bond Investors (Apr. 14, 2016), available at https://www.sec.gov/news/pressrelease/2016-68.html.
 Andrew J. Ceresney, Director, Div. of Enforcement, U.S. Secs. & Exch. Comm’n, Securities Enforcement Forum West 2016 Keynote Address: Private Equity Enforcement (May 12, 2016), available at https://www.sec.gov/news/speech/private-equity-enforcement.html.
 See, e.g., MSRB: Financial Disclosures Way Up, Bank Loans Not so Much, The Bond Buyer (Mar. 4, 2015), available at http://www.bondbuyer.com/news/washington-securities-law/msrb-financial-disclosures-way-up-bank-loans-not-so-much-1071038-1.html; MCDC Spurs More Notices of Disclosure Failures, The Bond Buyer (June 2, 2014), available at http://www.bondbuyer.com/issues/123_104/mcdc-spurs-more-notices-of-disclosure-failures-1062944-1.html;.
 See 2015 Fact Book, Municipal Securities Rulemaking Board, at 66, available at http://www.msrb.org/msrb1/pdfs/msrb-fact-book-2015.pdf.
 See, e.g., Jack Casey, How MCDC Has Changed Continuing Disclosure Practices, The Bond Buyer (Sep. 21, 2016), available at http://www.bondbuyer.com/news/washington-enforcement/how-has-mcdc-changed-continuing-disclosure-practices-1114036-1.html; Jack Casey, MCDC Has Improved Disclosure but Issues Remain, The Bond Buyer (Apr. 22, 2016), available at http://www.bondbuyer.com/news/washington-securities-law/mcdc-has-improved-disclosure-but-issues-remain-1101990-1.html; MCDC Credited with Boosting Muni Disclosure, The Bond Buyer (Feb. 3, 2016) found at http://www.bondbuyer.com/news/washington-securities-law/mcdc-credited-with-boosting-muni-disclosure-1095588-1.html.
 Robert Doty, Expanding Municipal Securities Enforcement: Profound Changes for Issuers and Officials, The Bond Buyer (July 12, 2016), available at http://www.bondbuyer.com/news/commentary/expanding-municipal-securities-enforcement-profound-changes-for-issuers-1108290-1.html.