A federal jury yesterday found that the city of Miami and its former budget director had defrauded bond investors by failing to truthfully disclose the city’s deteriorating financial condition, the Wall Street Journal reported today. The verdict came in the first federal jury trial by the U.S. Securities and Exchange Commission against a municipality. The SEC last month settled other civil cases with 71 municipal issuers as part of an agency initiative to improve disclosure. “We will continue to hold municipalities and their officers accountable, including through trials, if they engage in financial fraud or other conduct that violates the federal securities laws,” Andrew Ceresney, director of the agency’s enforcement division, said Wednesday. The jury found that Miami had committed securities fraud while reporting on the city’s finances in 2007, 2008 and 2009. According to the SEC’s complaint, Miami transferred dollars earmarked for specific capital projects between funds, enabling the city to meet its own reserve-fund requirements.
