The Associated Press
LOS ANGELES Ÿ Federal regulators have told at least two major financial firms they may face civil charges for misleading investors in the Orange County financial collapse, the Los Angeles Times reported today.
The Securities and Exchange Commission warnings went to C.S. First Boston Corp. and Rauscher Pierce Refsnes Inc. of Dallas, the Times quoted unidentified sources as saying.
First Boston sold a $110 million pension bond issue for Orange County in 1994 that is now in default.
Rauscher was financial adviser for a $299 million bond sale on behalf of 27 Orange County school districts, which then put the money into the county's pool.
At Rauscher today, a spokeswoman would neither confirm nor deny receiving any notice. A spokesman at C.S. First Boston declined to comment Monday.
The county was pushed into bankruptcy Dec. 6 after suffering $1.7 billion in investment losses.
The most probable charges, sources told the paper, would be violations of an SEC rule about misleading investors or omitting ''material facts'' from bond documents.
The SEC began notifying public officials and lawyers of possible civil charges about two weeks ago, anonymous sources told The Associated Press. Possible sanctions include injunctions forbidding future violations of securities laws and unspecified civil penalties.
An SEC official declined to comment to the AP about the possible civil action, citing agency policy.
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