SEC's new disclosure stance positive for municipal bonds -Moody's

NEW YORK Mon May 13, 2013 10:24am EDT

NEW YORK May 13 (Reuters) - Recent efforts by the U.S. Securities and Exchange Commission to boost the level and the quality of local governments' disclosures, including those that resulted in fraud charges against Harrisburg, Pennsylvania, will subsequently improve the whole industry, Moody's Investors Service said on Monday.

The SEC charged Pennsylvania's cash-strapped capital with fraud last week, marking the first time the commission went after a municipality for making misleading statements outside of the disclosure documents provided in bond sales. The commission did not single out any individuals in the charge.

The Moody's report written by Chief Credit Officer Public Sector Ratings Anne Van Praagh and Associate Analyst Coby Kutcher, lists other recent SEC actions.

In March, the SEC found that Illinois misled investors by failing to include significant information about its unfunded pension plan. It also found that New Jersey "failed to disclose that pension benefits had increased and the plans were under- funded."

"The SEC's stepped-up enforcement of disclosure requirements, both in terms of quality and timeliness, should be credit-positive for the industry long term," the report said.