Federal securities regulators intend to recommend filing civil cases alleging that Miami and a former official misled investors about the city's financial health when it sold hundreds of millions of dollars of bonds, the Wall Street Journal reported today. The correspondence from the Securities and Exchange Commission said that the agency's enforcement staff also has recommended that the city be fined for allegedly violating federal securities law. The SEC investigation examined whether the city used funds intended for roads and other purposes to fill budget gaps elsewhere. Bondholders sued, saying that the moves obscured the city's true finances. The Miami case is part of a broader push by federal and local regulators to crack down on the way that municipalities represent their finances to buyers of bonds. The SEC is scrutinizing municipal bond sales around the nation to see if buyers had a fair picture of finances and that money raised with the proceeds was used for intended purposes.
