Municipal Bonds

Roughly 20% of the nearly 50,000 issuers of U.S. municipal debt do not supply timely disclosures after their bonds have been issued (source: WSJ, May 2013). It appears Harrisburg, Pa is one of those municipalities, agreeing to settle SEC charges. The SEC faulted Harrisburg for making misleading financial statements from 2009 to 2011. The SEC brought a similar case against New Jersey in August 2010.

 

The city of less than 50,000 was nearly pushed in bankruptcy in 2011 (note: municipalities may be able to file for bankruptcy but states cannot). Harrisburg’s 2009 budget stated that its credit rating was Aaa even though it was Baa1. The city failed to note this Moody’s downgrade in 2010 and 2011. In recent years, the SEC has increased its investigations of the $3.7 trillion municipal-debt market.