Second Wave Of MCDC Hits Underwriters ….No Smooth Sailing Ahead!

On September 30 the Securities and Exchange Commission ("SEC") announced another round of enforcement actions against 22 municipal underwriting firms for disclosure violations in connection with municipal bond offerings. The penalties, which totaled $4.12 million, ranged from $20,000 to $500,000, the maximum penalty. This was the second wave of enforcement actions under the SEC's Municipalities Continuing Disclosure Cooperation (MCDC) initiative, which targeted material misstatements and omissions in municipal bond offering documents. Under the initiative, the SEC agreed to recommend favorable settlement terms to underwriters and issuers of municipal securities if they voluntarily self-reported possible violations involving compliance in the past five years with prior continuing disclosure obligations under SEC Rule 15c2-12 (the "Rule").