SEC Ramping Up Oversight of Muni-Bond Market
The U.S. Securities and Exchange commission (SEC) is ramping up its oversight of the municipal bond market over concerns that entities issuing municipal debt are failing to adequately disclose budget and other problems which affect the price of bonds purchased by small investors, according to a Fox Business Report. The primary focus of this heightened scrutiny is on states such as New Jersey, New York and California.
Meredith Whitney, a prominent banking analyst, has recently reported that states and cities across the country are facing budget woes to the extent that some municipalities won’t be able to make their debt service payments and be forced to default. She went on to say that between 50 and 100 issuers of more than $100 billion will default. While she has her skeptics, it is clear that state and city budgets and revenues are being severely tested to pay off bond holders, resulting in bond ratings being slashed.
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