Issuer Admitted to Wrongdoing in Official Statements

For the first time ever, a municipal bond issuer has admitted to wrongdoing in an SEC enforcement action. The Port Authority of New York and New Jersey (the “Port Authority”), one of the largest municipal bond issuers in the country, builds, operates and maintains transportation projects in New York and New Jersey.  The Port Authority approved non-revenue generating projects and bonds to fund the projects without disclosing known material risks surrounding the potential lack of legal authority to fund those projects in four Official Statements relating to the projects.

The SEC determined that the Port Authority violated the Securities Act by omitting disclosures in the Official Statements concerning the risks surrounding the Port Authority’s legal authority to fund the projects that were necessary in order to make certain statements within the Official Statement, in light of the circumstances under which they were made, not misleading.  The Port Authority subsequently paid a $400,000 penalty to settle the charges.