The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
By Cyril Tuohy
The Securities and Exchange Commission (SEC) announced it has extended by nearly three months a program for bond issuers and underwriters to self-report violations to help smaller companies in the municipal market until Dec. 1.
The Municipalities Continuing Disclosure Cooperation Initiative (MCDC), which offers more lenient settlement terms to companies that come clean about past violations, was scheduled to expire on Sept. 10.
Extending the deadline will give smaller municipal securities underwriters and issuers more time to complete their reporting requirements. The program was launched March 10.
Andrew Ceresney, director of the SEC’s Enforcement Division, said in a news release that many underwriters and issuers were working to “take advantage of the initiative within its time period.”
“These adjustments to the program are designed to encourage as much participation as possible, which we expect will ultimately benefit investors by encouraging improved compliance with continuing disclosures by the broadest group of industry participants,” Ceresney said.
In the event municipalities and their advisors who don’t step forward are found in violation, the SEC can’t guarantee leniency.
SEC officials said civil penalties for eligible underwriters reporting under the MCDC program are capped depending on the size of the issuer.
For underwriters with 2013 reported total annual revenue of more than $100 million, penalties are capped at $500,000, according to the SEC.
Underwriters with 2013 reported total annual revenue of between $20 million and $100 million will have their penalties capped at $250,000. For underwriters with 2013 reported total annual revenue of less than $20 million, penalties are capped at $100,000.
Kings Canyon Join Unified School District, a 10,000-student K-12 district located east of Fresno, Calif., participated in the program, the SEC said last month.
The district was found in violation of Rule 15c2-12 of the Securities Exchange Act of 1934, the SEC said. Rule 15c2-12 pertains to the ongoing disclosure of information related to the issuing of municipal securities.
In a November 2010 bond offering for $6.8 million, Kings Canyon JUSD claimed in documentation that there was “no instance in the previous five years in which it failed to comply in all material respects with any previous continuing disclosure information,” the SEC also said.
Since the district hadn’t disclosed information between 2008 and 2010 pertaining to previous municipal bond offerings in 2006 and 2007, the statements the district made in the 2010 documents about prior disclosure were false, the SEC said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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