The city of Miami responded to the SEC over charges about its bonds. The statement is below.

The City prides itself on the transparency of its bond offering documents and its history of meeting its obligations to bondholders. The City did not violate any securities laws, and looks forward to the opportunity to demonstrate that in a court of law.

 Further, the City wants to emphasize the following critical points about the SEC's lawsuit:

The Lawsuit Is About Routine Transfers that Were Immaterial

  1. The SEC has charged the City and its former budget director with securities fraud charges in connection with bonds issued in 2009.
  2. The SEC alleges that the City made misrepresentations in the 2009 bond offerings about transactions that occurred between four and over five years ago. These transactions consisted of transfers from the City's Capital Improvements Fund to the City's General Fund made in connection with the City's 2007 and 2008 fiscal years (ending September 30, 2007 and September 30, 2008). These transfers total less than $37.5 million out of budgets totaling more than $1 billion.

The City Made Extensive Disclosures About the Transfers

    3.  The SEC's claim that the City made misleading disclosures about the transfers is
         unfounded. In fact, the City made extensive disclosures about the transfers. 

    4.   With respect to the transfers that occurred in fiscal year 2007, the City's
          Comprehensive Annual Financial Report ("CAFR") for the period ended
          September 30, 2007 (the "2007 CAFR") disclosed the transfers at least twice: 

                a.  Page 9 of the 2007 CAFR disclosed that the City had returned unexpended
                     contributions from the Capital Improvement Fund to the General Fund. 

                b.  Page 51 of the 2007 CAFR disclosed that this transfer totaled $13.1 million. 

     5.  With respect to the transfers that occurred in fiscal year 2008, the City's CAFR for the
          period ended September 30, 2008 (the "2008 CAFR") also disclosed the transfers at
          least twice: 

               a.  Pages 8 of the 2008 CAFR disclosed that the City reduced its deficit in the
                    General Fund by $21.3 million through transfers from capital projects funds. 

               b.  Page 10 of the 2008 CAFR disclosed that the City reduced its deficit in the
                    General Fund by $21.3 million through transfers from capital projects funds. 

The City's Outside Auditors Approved of the Transfers 

    6.  The transfers were reviewed and approved by the City's outside auditors, McGladrey &
          Pullen LLP, at the time. McGladrey reviewed the transactions again in 2010 after the
          SEC's investigation began, and reaffirmed its agreement with the transfers. 

The Credit Rating Agencies Understood the Transfers
and the City's Overall Financial Condition

7.  The SEC's lawsuit contains baseless allegations that the City misled the credit rating
     agencies about the transfers in advance of certain bond offerings conducted by the
     City in May 2009. In truth, the City discussed the transfers with the rating agencies,
     and the rating agencies reported extensively on the transfers and the City's fiscal
     challenges.

                 a.  Fitch Ratings stated: "Fiscal 2008 ended with a drawdown of $6.9 million, 
                      although officials offset a larger real operating deficit with the use of one-
                      time capital projects cash held outside the general fund." 

                 b.  Standard & Poor's stated: ". . . we expect the city will face structural budget 
                      gaps that would wipe out reserves within two years without revenue
                      enhancements or spending reductions . . ." 

     8.  The rating agencies based their 2009 ratings on these known facts, which included
           expectations that the City's General Fund would be "wiped out" within two years. The
           transfers did not affect the ratings assigned to any of the City's bonds.