The SEC has charged a California water district and its manager with misleading investors in connection with the district’s $77 million bond offering. Specifically, the SEC alleges that the Westlands Water District and its manager engaged in improper reserve accounting to give the appearance of higher revenues, which the manager referred to as “a little Enron accounting” at a board meeting. Probably not the most helpful thing to say, ever, in connection with a securities issuance.
The district and the manager settled with the for $125,000 and $50,000, respectively, but neither admitted nor denied the allegations. This case shows the SEC’s increased focus on municipal securities issuers. More detail can be found by clicking this link. https://www.sec.gov/news/pressrelease/2016-43.html