SAN FRANCISCO (Legal Newsline) – The Securities and Exchange
Commission (SEC) announced that School Business Consulting Inc. and Keygent LLC
will settle allegations of using deceptive practices when soliciting business
from five California school districts.
According to the SEC, these school districts were using
School Business Consulting to advise them on their hiring process for financial
professionals. While this was underway, Keygent allegedly retained School Business
Consulting. Keygent purportedly sought the municipal advisory business of the same school
districts. School Business Consulting allegedly shared confidential information
about the districts with Keygent.
“This unauthorized exchange of confidential client
information could have given Keygent an improper advantage over other municipal
advisors that were candidates for the same business,” Andrew Ceresney, director
of the SEC Enforcement Division, said.
“The Dodd-Frank Act prohibits this type of deceptive behavior by
advisors when dealing with municipal issuers.”
School Business Consulting was additionally charged with
failing to register as a municipal adviser.
“These laws apply not only to municipal advisers, but also
those who solicit business on behalf of municipal advisers,” LeeAnn Ghazil
Gaunt, chief of the SEC Enforcement Division’s Public Finance Abuse Unit, said. “Municipal entities should be able to trust
that their selection of a municipal adviser is untainted by any breach of
School Business Consulting will pay $30,000, while its
president will pay a $20,000 penalty. Keygent will pay $100,000 while its
principals will pay $30,000 and $20,000 respectively.