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So they screwed up:
In addition to those with direct responsibility for drafting the City’s financial disclosures, the Mayor and City Council must also bear responsibility for the City’s failure to disclose information about the City’s looming pension crisis and potential liability for the City’s non-compliant sewer rates. Elected officials who authorize the issuance of municipal securities have an obligation to satisfy themselves that the disclosures made in connection with those issuances accurately disclose significant risks to the investing public.
They were warned not to screw up:
In advance of the Council’s approval of the Ballpark Bonds, the Mayor and City Council members received the Bryan Cave Memo, which warned that Council members “cannot simply ‘rubber stamp’ the [disclosure] document.” This memorandum was followed by an oral presentation…
And they ended up lying to potential buyers of the city’s bonds:
In the months following this advice, the Council learned of several instances where the City faced significant potential liability, but made no inquiry as to whether these potential threats to the City’s finances were disclosed to the investing public.
But, don’t worry, it’s not their fault:
First, the Council members clearly did not view ensuring accuracy of bond disclosures as part of their duties, and aside from the Bryan Cave Memorandum and presentation, no one told them that they were charged with that obligation.
Wait, let’s get this right: so somebody told them but didn’t tell them enough.
They were just “negligent:”
As such, the Mayor and City Council must share the responsibility for some of the City’s disclosure failures due to their negligent behavior
(Webster’s New World Dictionary definition of negligent: habitually failing to do the required thing. Careless, lax, inattentive or indifferent.)
But not knowingly reckless. That’s a $20 million analysis.