Judge rejects Miami's bid to dismiss fraud lawsuit filed by regulator
US District Judge Cecilia Altonaga rejected the claim of the City of Miami that the US Securities and Exchange Commission failed to allege any false or misleading statements about its municipal bond offerings, Reuters reported. Miami lost its bid to have the lawsuit dismissed when Altonaga ruled that she was not persuaded that the regulator's complaint was a "shotgun pleading."
Altonaga wrote in her decision, "Those general allegations support each claim for relief and identify the relevant events, misrepresentations, and omissions advanced by the SEC." The judge did not also agree with the city's arguments that the SEC failed to demonstrate that the alleged misstatements or omissions were relevant to investors.
In an interview with Reuters, Miami Mayor Tomas Regalado said the city sort of anticipated the decision. Although he pledged to continue litigating, he also said the city was willing to settle. He said, "What I hope is that we can get a settlement that would not affect the positive outlook that we have in the bond offerings of the city now."
Altonaga also did not dismiss the fraud claims filed by the SEC against Former Miami Budget Director Michael Boudreaux in a separate decision. Boudreaux had argued that he had qualified immunity from civil liability as a public official.
In July, the regulator filed a case against Miami and Boudreaux in the course of its crackdown on issuers of the $3.7 trillion municipal bond market for their failure to give exact and timely information to their investors, the report said. According to the lawsuit, Miami and Boudreaux misled investors starting in 2008 regarding interfund transfers in three bond offerings in 2009 amounting to $153.5 million. The regulator also said that the city violated a cease-and-desist order it had entered into with the SEC in 2003 over a similar wrongdoing.