U.S. SEC charges Oppenheimer, BNY, Jefferies and TD over municipal bond disclosures

BY Reuters | MUNICIPAL | 09/13/22 08:59 AM EDT

Sept 13 (Reuters) - The U.S. Securities and Exchange Commission (SEC) on Tuesday said it had charged Oppenheimer & Co, BNY Mellon, TD Securities and Jefferies, with failing to comply with municipal bond offering disclosure requirements.

The agency has filed litigation against Oppenheimer, while the other three brokers agreed to settle. The charges are the first brought by the SEC under a new municipal bond disclosure law. The agency said the four brokers sold new issue municipal bonds without obtaining required disclosures for investors.

Each of the firms purported to rely on an exemption to the typical disclosure requirements called the limited offering exemption, but they did not take the steps necessary to satisfy the exemption's criteria, the SEC said.

BNY, TD and Jefferies together will pay around $1.25 million in penalties and disgorgement. (Reporting By Washington newsroom and Michelle Price; Editing by Chizu Nomiyama)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.