SEC MCDC Underwriter Fines: Final Round?

HFA Partners  |  February 5, 2016

On Tuesday, the SEC announced enforcement actions against another 14 municipal bond underwriting firms for alleged violations under the 2014 MCDC Initiative. Hospitals who self-reported have not heard who'll be next.


Two years ago, we discussed the MCDC Initiative and the potential impact to not-for-profit hospitals and other municipal borrowers.

On Tuesday, the SEC announced that 14 more municipal underwriters agreed to pay a total of $4.6 million and take remedial actions to settle charges that bond offering documents contained false or misleading statements about issuers meeting their continuing disclosure obligations, including Rule 15c2-12.

The firms did not admit or deny the findings but agreed to cease and desist from future violations.

So far, 72 underwriters have settled under the voluntary self-reporting program.

According to the SEC, this represents 96% of market share for municipal bond underwriting, so it would appears that the SEC is done going after underwriters. 

Now that the SEC has run out of underwriters, hospitals and other municipal borrowers who self-reported under the Initiative are wondering if they could be next.

MCDC Round #3 - List of Firms and Penalty Amounts

Barclays Capital Inc. – $500,000
Boenning & Scattergood Inc. – $250,000
D.A. Davidson & Co. – $500,000
First Midstate Inc. – $100,000
Hilltop Securities Inc. – $360,000
Janney Montgomery Scott LLC – $500,000
Jefferies LLC – $500,000
KeyBanc Capital Markets Inc. – $440,000
Mitsubishi UFJ Securities (USA) Inc. – $20,000
Municipal Capital Markets Group Inc. – $60,000
Roosevelt & Cross Inc. – $250,000
TD Securities (USA) LLC – $500,000
United Bankers' Bank – $160,000
Wells Fargo Bank N.A. Municipal Products Group – $440,000



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