Events of Interest to Municipal Bond Investors

Most investors automatically equate a municipal bond investment with safety. Not so fast, investors. The Securities and Exchange Commission announced yesterday that it was filing and settling claims against 36 municipal bond offering companies. The SEC charged that the firms used offering documents that contained material false statements or omissions, and that the firms did not conduct adequate investigations before selling the bonds to their customers. The brokerage firms agreed to pay civil penalties and refrain from such violations in the future. Some of the firms charged, including Merrill Lynch, Citigroup, Goldman Sachs, Stifel Nicholas and Raymond James, agreed to pay fines of $500,000. Read the SEC’s press release here.

In other muni bond news, an article in The Wall Street Journal today recounted the downgrade to junk bond status of Chicago’s bonds by Moody’s in May of this year. As WSJ reporters Timothy Martin and Mark Peters explain, Moody’s has adopted a stricter standard for rating bonds since the 2008 financial crisis. I for one applaud Moody’s for doing so. Municipalities including Dade County Florida and Santa Clara California are not so thrilled. They have responded by omitting Moody’s from their bond offerings.

What does this mean to muni bond investors? Check the ratings of the bonds you own and make sure that the rating is in line with the level of safety that you thought you were buying. If it were me, I’d take more comfort in a rating by Moody’s than the other ratings giants, Fitch and S&P.

Our firm  represents investors nationwide in claims against municipal bond offering companies. We recover money for our clients both in court and in FINRA arbitration. We welcome calls from investors with questions about their investments or suspicious account activity. You will speak directly with a securities attorney at 800.647.8130. Your call is confidential and complimentary.

Robert S. Banks, Jr. has more than 33 years experience representing investors in securities industry disputes and FINRA arbitration across the United States. His clients include institutional investors, pension funds, municipalities, fiduciaries, as well as individual investors. If you have concerns about your financial advisor or investment portfolio, please contact us and visit our website at

Investor Defenders are a practice group of Samuels Yoelin Kantor LLP focused exclusively on investor advocacy.