The Securities and Exchange Commission has recently investigated the City of Harrisburg, in Pennsylvania, finding that the municipality had made misleading statements in its budget report, annual and mid-year financial statement and public statements from 2009 to 2011.

This is the first time the SEC has gone after a municipality for misleading statements made outside its securities disclosure documents. The city failed to provide ongoing financial information that was relevant for holders of its bonds and misstated or failed to disclose critical information about its financial condition and credit ratings. This was not information investors could readily find elsewhere, or indeed at all. The city entered into a settlement with the regulator. The SEC has also issued a report on the disclosure obligations of public officials and their potential liability for public statements in the secondary market.