The SEC has increased its focus on the municipal market since the credit crisis and 18-month recession that ended in June 2009, Bloomberg News reported yesterday. Those events helped push Jefferson County, Alabama, Detroit and three California cities into bankruptcy and left government pension plans reeling from investment losses. The agency has settled with the governments of New Jersey, Illinois and Harrisburg, Pa., for misleading investors about their financial state. Last year, in a case against an agency in Washington state, the SEC levied its first fine against a municipal issuer that misled investors. The leniency program introduced in March is aimed at municipalities that fail to file timely reports on rating changes and other information of interest to investors, while claiming in bond documents that they do. It’s also open to the bankers who underwrote the debt. The SEC said that borrowers could settle without fines if they turn themselves in. Banks’ penalties are capped at $500,000.
