| NEW YORK
NEW YORK Oct 6 Miami's City Commission is set
to consider paying a $1 million fine to settle securities fraud
claims brought by the U.S. Securities and Exchange Commission,
according to documents posted on the city's website.
The proposed settlement would be the largest penalty the SEC
has ever imposed on a municipal bond issuer, Robert Doty, a
municipal litigation consultant, said on Thursday.
"I promise you that other municipal issuers and their legal
counsel and their financial advisers are going to take serious
note of this penalty," Doty said.
On Sept. 14, a jury found the Florida city and its former
budget director Michael Boudreaux liable for securities fraud in
the sale of over $150 million in municipal debt in 2009.
Penalties were not part of the jury trial.
The SEC's 2013 lawsuit alleged the city and Boudreaux played
"a shell game" by moving money among accounts to conceal Miami's
deteriorating financial condition from investors. Miami and
Boudreaux had denied wrongdoing, saying the fund transfers were
approved by auditors and publicly disclosed.
In a Sept. 22 court filing, the parties said they had
reached a tentative settlement, though terms were not then
disclosed. The deal must still be approved by the
city commission, which will consider a resolution to approve it
at an Oct. 13 meeting.
Miami City Attorney Victoria Mendez could not be reached for
comment. SEC spokeswoman Judith Burns declined to comment.
Boudreaux has not reached a settlement with the SEC, his
attorney Benedict Kuehne said in an emailed message on Thursday.
The former budget director remains confident he will be fully
exonerated, Kuehne said.
The lawsuit against Miami was the first SEC enforcement
action against a municipal issuer to go to trial and a rare
instance of monetary penalties being sought against a
The SEC has previously been reluctant to impose penalties
that would be passed on to taxpayers, Doty said. But the SEC has
in recent years sought to more tightly regulate the $3.7
trillion municipal bond market, and securities lawyers believe
its success in Miami will further embolden the agency's efforts.
The case is Securities and Exchange Commission v City of
Miami et al, U.S. District Court, Southern District of Florida,
(Reporting By Dena Aubin; Editing by Anthony Lin and David