The U.S. Securities and Exchange Commission announced Monday that the City of Harrisburg has agreed to settle new charges of securities fraud.
In a news release, the SEC said the fraud charges stemmed over misleading public statements the city made when its financial condition was deteriorating, and financial information available to municipal bond investors was either incomplete or outdated.
The SEC said the misleading statements were made in the city's budget report, annual and mid-year financial statements, and a State of the City address.
The case marks the first time the SEC has charged a municipality for misleading statements made outside of its securities disclosure documents.
The SEC said Harrisburg failed to provide financial information for the benefit of investors holding hundreds of millions of dollars in bonds issued or guaranteed by the city.
Because of the city's non-compliance from 2009 to 2011, investors had to seek out Harrisburg's other public statements in order to obtain current information about the city's finances, the commission said.
Stephen Reed was mayor from 1982 to 2010. Current Mayor Linda Thompson was sworn into office in 2010.
The SEC added that very little information about the city's fiscal situation was publicly available elsewhere, and that information on the city's website was either misstated or failed to disclose critical information about Harrisburg's financial condition and credit ratings.
In a statement, Mayor Linda Thompson said the investigation was settled without a lawsuit in the courts, and without any monetary sanctions being assessed against the city.
She said the city has completely revamped its policies and procedures for financial disclosures to prevent a similar failure in the future.