The Port Authority of New York and New Jersey has admitted wrongdoing and agreed to pay a $400,000 penalty to settle SEC charges that it failed to adequately disclose project risks to investors purchasing $2.3 billion in bonds to fund the Pulaski Skyway. The settlement includes additional remedial measures.
The Authority’s internal discussions raised substantial doubts about the project’s lawful authorization, and risks of bondholder challenges. Yet, the issuer’s offering documents made no mention of those risks and represented the proceeds would be used for projects “authorized by law”.
The SEC order charges negligent violations of ’33 Act § 17(a). The Authority is the first municipal issuer to admit wrongdoing in an SEC proceeding.
The case is yet another high-water mark for the Commission’s ever-escalating activity with respect to municipal securities markets. The markets were among those targeted by Dodd-Frank.
The Order, In the matter of The Port Authority of New York and New Jersey, ’33 Act Rel. No. 10278, AP File No. 3-17763 (SEC Jan. 10, 2017), is here.