WASHINGTON, June 25 The U.S. Securities and
Exchange Commission received an emergency court order on
Wednesday to keep the city of Harvey, Illinois, from selling
bonds this month.
The regulator had rushed to file for the restraining order
after it learned of Harvey's plans to issue debt this week. The
SEC alleges Harvey and its comptroller misused proceeds from a
bond deal for building a hotel and schemed to defraud investors.
On Wednesday, Judge Rebecca Pallmeyer of the U.S. District
Court for the Northern District of Illinois held an emergency
hearing and then barred the Chicago suburb from selling any
bonds through July 14, the SEC said.
The court order also bars the city's comptroller from
"incurring any extraordinary expenses beyond reasonable and
customary personal and business expenses," according to the SEC.
There will be a hearing on July 8 to consider the SEC's full
Describing the city's financial condition as "grave," the
SEC's enforcement unit had said Harvey would likely
misappropriate any funds raised by future bond sales.
By law, issuers in the $3.7 trillion municipal bond market
do not have to notify federal regulators of planned sales and it
is very rare for the SEC to seek to stop a sale.
(Reporting by Lisa Lambert; editing by Matthew Lewis)