SEC sanctions two Kentucky agencies over bond transparency - WDRB 41 Louisville News

SEC sanctions two Kentucky agencies over bond transparency

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LOUISVILLE, Ky. (WDRB) – The U.S. Securities and Exchange Commission has sanctioned two public agencies in Kentucky that failed to properly disclose financial information before selling bonds.

The Kentucky Housing Corp., which finances affordable housing in the state, and the Frankfort Plant Board admitted the violations and agreed to settlements. The SEC didn’t issue any fines.

No other governments or public entities in the state were censured.   

The violations were self-reported under an SEC program that lets governments tell regulators about errors and omissions in municipal bond documents.  

The housing corporation – a largely governor-appointed body whose board also includes Kentucky’s Attorney General and Finance Secretary – acknowledged that it included misleading information in six bond sales between 2011 and 2013.

The agency had promised to submit required annual reports and financial statements, but instead filed its 2009 statements more than a year late, and its 2010 statements a month past its deadline, the SEC said. Other information from 2009 to 2012 was due before the bond sales, but filed after.

The housing corporation “knew or should have known that these statements were untrue,” the SEC said.

It has since “revised its disclosure policies to fully satisfy its continuing disclosure obligations,” the Kentucky agency said in a statement.

The housing authority mentioned the settlement with the SEC in its official statement in June for a $72.5 million bond issue.

The Frankfort Plant Board, which provides water and electric service in the state capital city and surrounding counties, also filed key financial documents late, despite telling investors in 2013 that it submitted the information on time.

It was 10 months late in sending 2008 financial statements to a municipal securities board, and also weeks late in filing statements for 2011 and 2012. It also missed deadlines to provide data about its operations for 2010 and 2012, according to the SEC.

The Frankfort agency declined to comment.

The Kentucky Housing Corp. and the Frankfort Plant Board both agreed to create policies and procedures and provide training about securities laws.

They were among more than 70 U.S. agencies that were cited by the SEC. Andrew Ceresney, director of the SEC’s enforcement division, said in a statement that “continuing disclosure failures were a widespread and pervasive problem in the municipal bond market.”

At the same time, he said, the self-reporting initiative has “brought attention to this important issue and resulted in increased compliance by municipal issuers and underwriters.”

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