SEC accuses Rochester, NY of misleading investors


The city of Rochester, NY, former city and school finance officials and a city council corporation misled investors about the school system’s struggling finances, the Securities and Exchange Commission said Tuesday.

The agency alleges that in 2019 Rochester sold $119 million in municipal bonds on behalf of its school district without informing investors that the schools were in financial trouble due to overspending on teacher salaries. Former city chief financial officer Rosiland Brooks-Harris and former school chief financial officer Everton Sewell and city councilor Richard Ganci of Capital Markets Advisors were all aware of the problem, the SEC said, but the bond offering documents included outdated financial statements.

An audit found the overspending, which totaled nearly $30 million, less than two months after the bond was sold and the city’s debt rating downgraded, the SEC said.

Rochester officials « vehemently disagree with this filing and will take all appropriate legal action to defend the city and its former chief financial officer, » the city said.

« We have made it clear that the city does not have access to or authority over the finances of the City of Rochester School District, and therefore cannot be responsible for the district’s withholding of financial information, » the statement read.

In a settlement submitted for court approval, Mr. Sewell, without admitting or denying the SEC’s findings, agreed to pay a $25,000 fine and not participate in future municipal bond transactions. « Mr. Sewell has resolved his differences with the SEC, » his attorney, David Rothenberg, said when reached by phone.

Ms. Brooks-Harris, Mr. Ganci and Capital Markets Advisors are charged with violating anti-fraud provisions of securities laws in the United States District Court for the Western District of New York.

Mr. Ganci, his colleague Richard Tortora and Capital Markets Advisors are also accused of breaching their fiduciary duty as city councilors as well as deceptive practices and fair use laws. A lawyer for Mr. Ganci, Mr. Tortora and the firm could not be reached for comment.

Write to Heather Gillers at

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Appeared in the print edition of June 15, 2022 under the title « SEC Alleges Rochester, NY, Misled Investors ».


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