On Monday, the Securities and Exchange Commission (SEC) slammed two California-based municipal advisory firms with a fine of $200,000. Their executives were also ordered to pay a fine. It was alleged that they used deceptive business practices in dealing with five school districts. It is the first enforcement action the SEC has taken under the municipal advisor antifraud provisions of the Dodd-Frank Act. School Business Consulting Inc. (SBCI) was censured and fined $30,000 while its president and sole employee Terrance Bradley was barred as acting as municipal advisor and was fined $20,000. Keygent LLC was censured and fined $100,000 and two of its directors, Anthony Hsieh and Chet Wang were ordered to pay $30,000 and $20,000, respectively. The SEC found that SBCI retained Keygent, and, during this time, Bradley improperly provided confidential information about the hiring processes of five school districts that were his client to Keygent. The school districts were allegedly not aware that Bradley was sharing confidential information.
In 2010, Keygent retained SBCI to serve on its advisory board. Keygent gained access to contacts through Bradley. Bradley then assisted in drafting the request for qualification documents that the five school districts used in their hiring process. Bradley gave Keygent information like advanced copies of draft interview questions and details of competitors’ proposals, sometimes including competitors’ fees. He never informed the districts he was sharing the information, creating a conflict of interest.
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