The U.S. Securities and Exchange Commission (SEC) alleges that four Wall Street firms, including TD Securities (USA) LLC, violated disclosure requirements in municipal bond underwritings.
In the first cases to allege that underwriters failed to qualify for exemptions from obtaining disclosures for investors in certain bond deals, the SEC filed settled charges against TD Securities, BNY Mellon Capital Markets LLC and Jefferies LLC. Separately, it also charged another firm, Oppenheimer & Co. Inc., with similar allegations.
In its complaint and the settled orders, the SEC alleged that the four firms sold new bond issues “without obtaining required disclosures for investors,” the agency said in a release.
TD, BNY, and Jefferies all agreed to settle the allegations without admitting or denying the SEC’s findings. In settling, they all agreed to censures, to cease and desist from future violations, and to pay disgorgement and monetary penalties.
TD agreed to a US$100,000 penalty and almost US$53,000 in disgorgement plus prejudgment interest.
Jefferies also agreed to a US$100,000 penalty and over $43,000 in disgorgement; BNY agreed to pay a $300,000 penalty and almost $657,000 in disgorgement.
The SEC’s complaint against Oppenheimer, which was filed in federal district court in Manhattan alleging the same violations, seeks permanent injunctions, disgorgement, and a civil penalty.
The SEC said that, as a result of its findings in these cases, it has begun investigating other firms’ reliance on certain underwriting disclosure exemptions.
“We encourage underwriters to examine their practices and to self-report any failures to us before we identify them ourselves,” said Gurbir Grewal, director of the SEC’s division of enforcement, in a release.