The SEC filed a civil action against a municipal advisor for defrauding the city of Rolling Fork, Mississippi, in connection with a municipal bond offering. The defendants were also charged with failing to disclose payments received from an underwriter recommended by the defendants and hired by the city.
In the Complaint, the SEC stated that Malachi Financial Products, Inc. ("Malachi") and its President, Porter B. Bingham ("Bingham"), were hired by the city to provide advisory services for a municipal bond offering intended to raise funds for community improvement projects. Mr. Bingham allegedly recommended that the city hire Bonwick Capital Partners, LLC ("Bonwick") to underwrite the offering after a Bonwick employee paid Mr. Bingham $2,500 for the referral. Mr. Bingham failed to disclose this payment to the city. Bonwick was ultimately hired as the underwriter.
Malachi and Bingham were also charged for fraud in billing the city for "additional services" not actually provided. Further, the SEC alleged that the defendants charged excessive and unreasonable fees for a "minimal amount of work" performed.
The SEC charged Malachi and Bingham with violating Exchange Act Sections 15B(a)(5) and 15B(c)(1) and MSRB Rule G-17.
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