2 Are Accused of Fraud in School Bond Sale
The Securities and Exchange Commission filed a civil fraud complaint against an investment banker and a bond attorney Thursday, accusing them of persuading a western Pennsylvania school district to sell $9.6 million in municipal bonds and try to keep a $225,000 profit.
The SEC said bond lawyer Ira Weiss and investment banker L. Andrew Shupe violated anti-fraud provisions of the federal securities law in connection with a June 2000 bond sale by the Neshannock Township School District.
Federal rules ban local governments from investing the proceeds of bond sales at a profit, a practice known as arbitrage.
The SEC said Shupe marketed the bonds “as a way to earn $225,000 of interest rate arbitrage profit.”
Weiss’ attorney, David Hickton, said his client’s actions “were entirely proper.” Shupe declined to comment.
The SEC has assessed a $28,000 penalty against the school district, said Mark Zehner, an SEC attorney.
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