O.C. Bond Action Repeated Elsewhere
A former investment banker accused of failing to disclose the risks of buying bonds sold by Orange County has failed to make similar disclosures in Nevada County, an administrative law judge ruled.
But the judge, with the Securities and Exchange Commission, imposed no penalties against Virginia Horler, a former investment banker with Dain Rauscher Inc.
The unusual ruling likely will have no bearing on the outcome of the SEC case alleging that Horler failed to tell investors the risks of buying bonds sold by Orange County localities, her lawyer said.
Administrative Law Judge Brenda P. Murray concluded that sanctions against Horler weren’t warranted in the Nevada County case based partly on “her distinguished career as a securities professional,” the SEC said.
The judge also opted not to impose a cease and desist order sought by the SEC, based on Horler’s promise not to repeat the alleged conduct, her lack of a disciplinary record, and her willingness to accept 1996 California guidelines on disclosure.
Horler, who was Nevada County’s financial advisor on the $9.07-million municipal bond offering, nevertheless knowingly violated anti-fraud provisions by drafting an official statement on the 1990 offering that had “material misrepresentations” and omissions about “material information,” the judge ruled.
“We’re pleased that the administrative law judge determined that it was neither necessary nor appropriate to enter an order and that she dismissed the case without affording the SEC any of the relief it requested,” said Horler’s lawyer, Richard Morvillo of the Kirkpatrick & Lockhart firm.
Horler “has not been in the business for some time now,” Morvillo said. “She is retired.”
Dain Rauscher’s lawyer, Michael Missal of Kirkpatrick & Lockhart, said Murray’s ruling has “no implications” for the Minneapolis-based brokerage, an underwriter of municipal bonds sold in Orange County before it declared bankruptcy in 1994.
“Obviously, Dain Rauscher is pleased with the dismissal of the action,” Missal said.
“I don’t think Dain ever believed that Ms. Horler had done anything improper,” Missal said. “She truly is this wonderful person who sort of had the highest standards of care and practice in the industry.”
The brokerage and Horler are defendants in SEC civil cases stemming from the brokerage’s involvement in the Orange County bond offerings.
In August, U.S. District Judge Gary L. Taylor in Santa Ana dismissed similar allegations against one of Horler’s colleagues, Kenneth D. Ough, who was charged by the SEC with failing to tell investors the risks of buying Orange County bonds. The SEC has appealed that ruling, and the civil charges against Dain Rauscher and Horler are on hold pending the outcome of the appeal. If the SEC loses the appeal, the cases against Dain and Horler will be dismissed, Missal said.
“It could be between a year and two years before we know,” Missal said.
