Avoiding securities law liability in conduit bond offerings.
Government Finance Review › Vol. 14 Nbr. 1, February 1998
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Summary
Issuers of government securities should prevent legal liabilities by becoming familiar with the provisions with federal securities laws. These provisions stipulate the absence of exemptions for issuers who misrepresented facts about the securities and the amount of fines according to the nature of the offense. Strategies suggested to avoid liability include seeking the assistance of legal experts, verifying the facts about the offered securities and establishing agreements to liberate issuers from disclosure responsibilities.
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Avoiding securities law liability in conduit bond offerings.
Antifraud provisions of law apply to offerings of state and local government securities that are issued by or on behalf of a governmental entity for a private business, health, or educational enterprise.
The federal securities laws' antifraud provisions(1) apply to offerings made by or on behalf of state and local governments. The recent litigation over Denver International Airport financing is one example of the application of these provisions.(2) If the antifraud provisions are violated, the Securities and Exchange Commission (SEC) can bring enforcement actions, and investors can bring action for damages, against both issuers and issuer officials. Accordingly, when state and local governments issue bonds or other securities to borrow money for their own governmental purposes, they must exercise care in making disclosure to investors. The antifraud provisions also apply to offerings of state and local government "conduit securities," i.e., securities that are issued by or on behal...See the full content of this document
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