The city of Miami lost a court bid to dismiss a U.S. Securities and Exchange Commission lawsuit alleging it engaged in securities fraud in municipal bond offerings by exaggerating the health of its general fund.
The regulator’s claims over three 2009 bond offerings totaling $153.5 million are sufficient to go to trial, U.S. District Judge Cecilia Altonaga ruled Dec. 27 in Miami. She rejected the city’s argument that the SEC failed to properly lay out its claims and link them to factual events.
“The court is not convinced the complaint is a shotgun pleading,” Altonaga said in the ruling.
The SEC sued Miami and an ex-budget director, Michael Boudreaux, in July, alleging they lied to investors about the details of transfers of millions of dollars from Miami’s capital improvement and development funds to the city’s general fund. The case is part of a three-year crackdown on state and local governments for not providing bond investors with accurate information about pension liabilities. Illinois and New Jersey settled with the agency after similar investigations.
The case is SEC v. City of Miami, 1:13-cv-22600, U.S. District Court, Southern District of Florida (Miami).