The Securities and Exchange Commission has settled its fraud case with two municipal advisory firms and their executives. They are accused of using deceptive practices when trying to solicit business from five school districts in California. The advisory firms, School Business Consulting Inc. and Keygent LLC, resolved the administrative proceedings without denying or admitting to the charges.<\/p>\n
According to the regulator, School Business Consulting gave Keygent LLC confidential information that allowed it to win municipal advisory contracts from the school districts. School Business Consulting had advised districts about their process for hiring financial professionals.<\/p>\n
The SEC said that without the district\u2019s consent School Business Consulting shared the confidential information with Keygent, including questions asked in interviews with the districts and what competitor candidates were proposing and charging. The Commission believes that the unauthorized disclosure of this information gave Keygent an \u201cimproper advantage\u201d over competitors.<\/p>\n
Municipal entities are entitled to be able to trust that their choice of a municipal advisor is not blemished by any breach of fiduciary duty. As part of the settlement, School Business Consulting will pay a $30K penalty and it has consented to a censure. The company’s president, Terrance Bradley, was ordered to pay a $20K penalty and is barred from acting as a municipal advisor. Keygent is also censured and will pay a $100K penalty. Its principals, Chet Wang and Anthony Hsieh, will pay $20K and $30K penalties, respectively.<\/p>\n