This week, it was announced that the Town of Oyster Bay, New York had agreed to settle charges brought forth by the Securities and Exchange Commission. In November of 2017, Oyster Bay and its former supervisor John Venditto were charged with defrauding investors in Oyster Bay’s municipal securities offerings. They were accusing of hiding the existence and potential financial impact of side deals with a businessman.
The SEC’s complaint alleges that Oyster Bay agreed to indirectly guarantee four separate private loans to the vendor totaling more than $20 million several years ago. The complaint accused Venditto and Oyster Bay of concealing the indirect loan guarantees when they should have been disclosed. The complaint states that the information was material to current and prospective investors.
The Town has agreed to settle the case by agreeing to permanent injunctions. It has also agreed to retain an independent consultant to advise the town on its policies, procedures, and internal controls regarding disclosures for securities offerings. Further details can be found here.