SEC Charges BNY Mellon, TD and Jefferies for Municipal Bond Disclosure Failures

The Securities and Exchange Commission (SEC) filed a litigated action against Oppenheimer & Co. Inc. and separately announced settlements with BNY Mellon Capital Markets LLC, TD Securities (USA) LLC, and Jefferies LLC, charging each of the four firms with failing to comply with municipal bond offering disclosure requirements.

These are the first SEC actions addressing underwriters who fail to meet the legal requirements that would exempt them from obtaining disclosures for investors in certain offerings of municipal bonds.

According to the SEC's complaint and the settled orders, during different periods since 2017, the four firms sold new issue municipal bonds without obtaining required disclosures for investors. Each of the firms purported to rely on an exemption to the typical disclosure requirements called the limited offering exemption, but they did not take the steps necessary to satisfy the exemption's criteria.

"Disclosure helps protect investors from fraud," said LeeAnn G. Gaunt, Chief of the SEC Enforcement Division's Public Finance Abuse Unit. "Underwriters must take seriously their responsibility to ensure municipal bond investors get the information they are entitled to."  

BNY agreed to pay $656,833.56 in disgorgement plus prejudgment interest and a $300,000 penalty. TD agreed to pay $52,955.92 in disgorgement plus prejudgment interest and a $100,000 penalty. Jefferies agreed to pay $43,215.22 in disgorgement plus prejudgment interest and a $100,000 penalty.