The unprecedented arrest of two public officials in connection with alleged municipal bond fraud further escalates the government’s relentless patrol of the municipal securities industry. On April 14, 2016, the Securities and Exchange Commission (“SEC”) filed civil fraud charges against the town of Ramapo, New York, the Ramapo Local Development Corp. (“RLDC”), and four local officials for allegedly misleading investors about the town’s financial condition prior to issuing municipal bonds, including one offering for the construction of a minor league baseball stadium.1 Two of the town officials also face criminal fraud charges. This first-of-a-kind action using parallel civil and criminal proceedings is a reflection of the SEC’s increased scrutiny of municipal underwriters and issuers,2 sending a message to the bond industry, and particularly individuals, that they are no longer safe from civil—and now criminal—penalties. Industry participants can expect that this is but the first of many joint efforts between the SEC and DOJ to prosecute municipal securities fraud.

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