SEC Reviewing Municipalities' Disclosures; Review Is Targeting Defaulted, Distressed Municipalities
Regulators have opened investigations into municipalities that may have misled investors about their financial condition, the top official at the Securities and Exchange Commission's municipal-bond enforcement unit said Thursday.</br></br>The unit launched a wide-ranging review of past disclosures by financially stressed states and local governments a little over a year ago, signaling regulators have stepped up scrutiny of municipal-bond sales amid mounting investor anxiety. That review has resulted in an unspecified number of investigations of issuers, said LeeAnn Gaunt, the chief of the municipal securities and public pensions unit at the SEC.</br></br>The unit is looking for instances where there is "tension between the disclosures and the subsequent announcements" of financial stress by municipal bond issuers, Ms. Gaunt said at a National Association of Bond Lawyers conference in Boston.</br></br>She didn't specify which issuers are under investigation.</br></br>The review underscores officials' interest in ensuring proper sales and trading practices in the $3.7 trillion municipal-bond market. The market has long been seen by many mom-and-pop investors as a reliable source of tax-exempt income and a vehicle for retirement savings.