The U.S. Securities and Exchange Commission has charged 36 municipal underwriting firms, including many that work in healthcare, with violations in municipal bond offerings.
The charges, part of the SEC's ongoing effort to increase transparency among bond issuers and underwriters, largely involve untimely disclosure, the sale of bonds using documents containing materially false statement or omissions, and failure to perform adequate due diligence to find misstatements and omissions.
The three dozen firms were the first underwriters to be charged under the Municipalities Continuing Disclosure Cooperation Initiative. A California school district was the first issuer to be charged.
The SEC declined to comment on whether bonds issued by healthcare companies were involved in its enforcement actions but several major underwriters that work in healthcare were charged, including B.C. Ziegler and Co., Piper Jaffray, Citigroup Global Markets, J.P. Morgan Securities and RBC Capital Markets.
Penalties ranged from $80,000 to $500,000, depending on the size and number of bond offerings.
SEC officials said during a conference call that they expect to pursue action against issuers in the future, but did specify a time frame for further action. Experts say hospitals should beef up their compliance efforts and protocols to ensure that their disclosures are honest and timely.
A full list of the underwriters involved and the fines levied against them can be found on the SEC's website.
