Cities, County Settle Bond Charges With SEC

Three California localities agreed to settle Securities and Exchange Commission charges that they failed to disclose the risks of investing in $58 million in municipal bonds. The SEC case is only its fourth ever against a city or county for disclosure fraud. The localities--Nevada County, Ione and Wasco--agreed to be subject to stiffer sanctions if they commit similar violations in the future. They neither admitted nor denied wrongdoing. The SEC, which originally alleged in February that the municipalities intended to defraud investors, dropped this allegation in its final order. Instead, the commission contended that the towns and county made misrepresentations or omissions on their 1989-1991 official statements for four bond sales. The SEC order did not allege any intent to defraud.