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You are here: Home / Business / SEC rules for schools

SEC rules for schools

September 27, 2011 By Bob Hague

Five Wisconsin school districts will share $30 million, as part of a settlement of federal charges over their purchase of risky investments. The Securities and Exchange Commission had accused the Royal Bank of Canada of misconduct in selling collateralized debt obligations to the Kimberly, Kenosha, Waukesha, Whitefish Bay, and West Allis-West Milwaukee school systems. The schools had invested $200 million to boost their retirement accounts. Those investments later became worthless – and the SEC agreed with the schools that RBC failed to give adequate disclosures about how risky they were.

The school districts put in $37 million and borrowed the rest. A large part of their losses will be paid to them within the next 10 days. The SEC order finds that the school districts lacked sufficient knowledge and sophistication to appreciate the nature of such investments. The government’s legal action is separate from a still pending civil lawsuit filed by the five school districts. The also in is in the process of taking action against the other defendant in the suit, the St. Louis-based financial firm of Stifel Nicolaus.

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Filed Under: Business, Crime / Courts, Education



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