Charter School Bond Review: What You Need to Know
The Securities and Exchange Commission (SEC) has its eye on charter school bonds and the financial consultants they work with. The SEC has been cracking down on unregistered advisors who have provided subpar advice to charter schools, putting them at risk of financial, reputational, and legal issues.
If you’re a charter school looking to finance school facilities, you’ll come across plenty of financial professionals offering guidance on your financing options. What you might not realize is that these services fall under federal securities laws enforced by the SEC and the Municipal Securities Rulemaking Board (MSRB). It’s important to know which advisors owe you a fiduciary duty – meaning they prioritize your interests – and which ones don’t.
For several years, the SEC has been investigating charter school bond financings and taking action against firms and individuals for violating federal laws. Recently, the SEC charged a charter school advisory firm for failing to disclose conflicts of interest in over $500 million of bond issues. In September, the SEC won a case involving fee-splitting and breach of fiduciary duties.
The SEC emphasizes that charter schools should only work with registered municipal advisors to avoid risks like inadequate advice, unfair pricing, and other negative outcomes. Working with unregistered individuals or firms could lead to costly mistakes in financing school facilities.
If you come across potential misconduct from unregistered municipal advisors, the SEC encourages you to report it. This could help prevent further harm and even lead to an enforcement action by the SEC.
Procopio attorneys have extensive experience with tax-exempt bond financing and SEC enforcement activity. They offer legal advice to charter schools at all stages of the facilities financing process and assist them in compliance with federal securities and tax laws. If you have any questions or concerns about these issues, feel free to reach out to Procopio for assistance.
