Ms. Uremovic's (Libi) claims about the investigation by the Securities and Exchange Commission (SEC) has been one of her most often published fake news stories and it can be found in many of her posts on several different social media platforms. The following quotes were pulled from Uremovic's Patch article regarding what the City of Beaumont had accomplished in 2017 and are examples of some of the claims she makes regularly.
- "the City was locked out of the Bond Market"
- "The S.E.C. has given the City until February 22, 2017 to re-submit Financial Statements and Bond Certificates of completion that are NOT forged."
The first claim, "The City was locked out of the Bond Market" is one she makes often. To properly debunk this false claim would require the city to disprove something that didn't happen, prove a negative. A statement would be required from the SEC that "Beaumont is not locked out of the bond market and has never been locked out of the market." I have not seen any statement from the SEC that would specifically dispute Uremovic's claim. At the same time, there is no statement or document supporting the claim that "The City was locked out of the Bond Market" The burden of proof of this one has to be on Ms. Uremovic. If there is any truth to her claim, she should be able to point to documentation or a statement from the SEC stating "The City of Beaumont is locked out of the bond market."
For the second claim, I'll only need to present a summary of the actual SEC order, using only the details from the order, and then let the reader decide. Any reasonable person should come to the conclusion that these claims are a distorition of the facts, fake news or outright lies.
The SEC issued an order on August 23, 2017 "Insituting Cease and Desist Proceedings" against the Beaumont Financing Authority.
On page 2 of the order the Beaumont Financiang Authority's violations are summarized:
1. This matter involves material misstatements and omissions by the BFA in the sale of municipal securities. Between 2003 and 2013, the BFA issued approximately $260 million in municipal bonds in 24 separate offerings. In connection with each of those offerings, a community facilities district established by the City of Beaumont, California (“the District”), in its capacity as an obligated person with respect to the bonds, entered into a continuing disclosure agreement (“CDA”) for the benefit of investors in the BFA’s municipal securities, including annual reports containing financial information and operating data relating to the bonds being offered. From the period of at least 2004 through April 2013, the District regularly failed to comply with its CDAs.
2. In 2012 and 2013, the BFA issued approximately $32.26 million of revenue bonds in five separate offerings. In each of those offerings, the BFA falsely stated in its official statements that, except in one instance several years earlier, the District had complied with its CDAs.
3. As a result of the conduct described herein, the BFA violated Sections 17(a)(2) and (a)(3) of the Securities Act.
On page 5 of the order is the legal description of the issues addressed in the SEC's order:
17. Section 17(a)(2) of the Securities Act makes it unlawful “in the offer or sale of any securities … directly or indirectly … to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.” 15 U.S.C. § 77q(a)(2). Section 17(a)(3) of the Securities Act makes it unlawful “in the offer or sale of any securities … directly or indirectly … to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.” 15 U.S.C. § 77q(a)(3). Negligence is sufficient to establish violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act. See Aaron v. SEC, 446 U.S. 680, 696-97 (1980). A misrepresentation or omission is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. See Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988).
On pages 6-7 the order lists the undertakings the City has agreed to. For simplification, I've filtered out the legal references.
Respondent undertakes to:
21. Within 180 days of this Order, establish appropriate and comprehensive written policies and procedures and periodic training regarding all aspects of the BFA’s municipal securities disclosures, including formal policies and procedures to be followed for the preparation, review and approval of official statements and continuing disclosures, and the designation of an individual officer of Respondent responsible for ensuring compliance by Respondent with such policies and procedures and responsible for implementing and maintaining a record (including attendance) of such training.
22. Within 180 days of this Order, establish appropriate and comprehensive written policies and procedures and periodic training regarding the accounting of bond proceeds and recordkeeping, and the designation of an individual officer of Respondent responsible for ensuring compliance by Respondent with such policies and procedures and responsible for implementing and maintaining a record (including attendance) of such training.
23. Within 180 days of this Order, ensure that the District complies with all existing continuing disclosure undertakings, including updating past delinquent filings if the District is not currently in compliance with its CDAs.
24. Retain an independent consultant (the “Independent Consultant”), not unacceptable to the Commission staff, to conduct a review of BFA’s policies and procedures as they relate to all aspects of the BFA’s municipal securities disclosures, the accounting of bond proceeds and recordkeeping. The Independent Consultant shall not have provided consulting, legal, auditing or other professional services to, nor had any affiliation with, the BFA during the two years prior to the institution of these proceedings.
25. Require the Independent Consultant to enter into an agreement that provides that for the period of engagement and for a period of two years from completion of the engagement, the Independent Consultant shall not enter into any employment, consultant, attorney-client, auditing or other professional relationship with the BFA, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity. The agreement will also provide that the Independent Consultant will require that any firm with which he/she is affiliated or of which he/she is a member, and any person engaged to assist the Independent Consultant in performance of his/her duties under this Order shall not, without prior written consent of the Division of Enforcement, enter into any employment, consultant, attorney-client, auditing or other professional relationship with the BFA, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity as such for the period of the engagement and for a period of two years after the engagement. The agreement will also provide that, within 180 days of the institution of these proceedings, the Independent Consultant shall submit a written report of its findings to the BFA, which shall include the Independent Consultant’s recommendations for changes in or improvements to the BFA’s policies and procedures. 7
26. Adopt all recommendations contained in the Independent Consultant’s report within 90 days of the date of that report, provided, however, that within 30 days of the report, the BFA shall advise in writing the Independent Consultant and the Commission staff of any recommendations that the BFA considers to be unduly burdensome, impractical or inappropriate. With respect to any such recommendation, the BFA need not adopt that recommendation at that time but shall propose in writing an alternative policy, procedures or system designed to achieve the same objective or purpose. As to any recommendation on which the BFA and the Independent Consultant do not agree, the BFA and the Independent Consultant shall attempt in good faith to reach an agreement within 60 days after the date of the Report. Within 15 days after the conclusion of the discussion and evaluation by the BFA and the Independent Consultant, the BFA shall require the Independent Consultant inform the BFA and the Commission staff in writing of the Independent Consultant’s final determination concerning any recommendation that the BFA considers to be unduly burdensome, impractical, or inappropriate. Within 10 days of this written communication from the Independent Consultant, the BFA may seek approval from the Commission staff to not adopt recommendations that the BFA can demonstrate to be unduly burdensome, impractical, or inappropriate. Should the Commission staff agree that any proposed recommendations are unduly burdensome, impractical, or inappropriate, the BFA shall not be required to abide by, adopt, or implement those recommendations.
27. Disclose in a clear and conspicuous fashion the terms of this settlement in any final official statement for an offering by Respondent within five years of the institution of these proceedings.
28. Certify, in writing, compliance with the undertakings set forth above in paragraphs 21-27. The certification shall identify the undertakings, provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The Commission staff may make reasonable requests for further evidence of compliance, and the BFA agrees to provide such evidence. The certification and supporting material shall be submitted to LeeAnn G. Gaunt, Chief, Public Finance Abuse Unit, with a copy to the Office of Chief Counsel of the Division of Enforcement, no later than sixty (60) days from the date of the completion of the undertakings.
On page 8 of the order the Cease and Desist is explained as follows:
A. Pursuant to Section 8A of the Securities Act, Respondent BFA cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act.
- The cease and desist order issues make no reference which a rational person could use to claim it applies to locking the city out of the bond market.
- The undertakings make no reference or inference to " re-submit Financial Statements and Bond Certificates of completion"