Bloomberg News
The SEC announced today that it has resolved all pending litigation in the action filed against the City of Rochester, New York, and the city’s former finance director Rosalind Brooks-Harris, as well as Capital Markets Advisors and two of its principals, Richard Tortora and Richard Ganci.
A U.S. District Court in the Western District of New York passed down a final judgement by consent against the CMA defendants Dec. 26. The other parties to the enforcement action had previously consented to judgments in the SEC’s favor, and Rochester officials have said that they were pleased with the resolutions, which included no financial penalties for the city.
The CMA Defendants, without admitting or denying the SEC’s findings, also consented to the court’s judgment which not only barred them from future violations of Section 15B(c)(1) of the Exchange Act and MSRB Rules G-17, G-42, and G-44, but also ordered civil penalties of $175,000 as to CMA, $30,000 as to Ganci, and $30,000 as to Tortora. As part of the settlement, the SEC dismissed its claims against CMA and Ganci for violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, which were the serious fraud charges in the complaint.
“My business partner, Rick Ganci, and I are pleased with the results in this matter and are happy to put it behind us,” Tortora said of the settlement.
The commission alleged in its complaint, originally filed in June of 2022, that the City of Rochester, Brooks-Harris, and CMA misled investors in a $119 million bond offering for the Rochester City School District by providing outdated financial statements that neglected to indicate that the District was experiencing at least a $25 million budget shortfall after overspending on teacher salaries.
The complaint separately alleged that the CMA Defendants failed to disclose to nearly 200 municipal clients that CMS had material conflicts of interest arising from their contingent fee agreements with the City and for violating MSRB Rule G-42 on standards of conduct.
The SEC also previously settled charges against former Rochester School District CFO Everton Sewell, who was allegedly aware of the district’s budget shortfall and misled a credit rating agency on the magnitude. Along with the same stipulations provided to Harris-Brooks, Sewell was ordered to pay a $25,000 penalty.