The Securities and Exchange Commission report on whether investors were deceived about New York City's financial condition when they bought the city's securities prior to its near-collapse in 1975 is scheduled for release at noon today.
The long-awaited report is expected to be critical of some of the practices of city officials and the banks and brokerage firms who underwrote the city's notes and bonds and sold them to the public. But it is not expected to charge them with fraud or other clear cut violations of the securities laws.
Rather, the 800-page document probably will consist of some 15 to 20 chapters detailing specific financing practices and deficiencies.
Each chapter also will have a conclusion on such issues as the adequacy of disclosure to investors, whether New York City officials even knew what the true financial state of their city was when they issued debt, and whether the city's mammoth banks may have resold city securities to an unwitting public at a time the banks knew the city was in deep financial trouble.
But, according to informed sources, these conclusions will fall short of alleging criminal wrongdoing.
"The report does not have any recommendations as to enforcement actions," an SEC spokesman confirmed yesterday, adding, however, that "this doesn't preclude future enforcement actions."
After the report is released, "The commission would consider what futher steps should be taken," the spokesman said.
The report, which was commenced in January 1976, has become embroiled in New York City's free-for-all race for mayor because the primary election will be held on Sept. 7.
Mayor Abraham Beame, who is running fo re-election, has accused the commission of meddling in the election campaign by rushing out the report in advance of the primary. Because the report deals mainly with the period during which Beame was mayor, he is expected to bear the brunt of the criticism directed at city officials, and the report could well dominate political debates in the remaining 10 days before the primary.
"It smells to high heaven." Beame said last weekend of the involvement of SEC staff member Robert Haft in the New York City investigation because Haft was formerly with a law firm that is backing one of Beame's opponents in the primary.
That drew a sharp rebuke from SEC chariman Harold M. Williams.
The commission has been claiming that Senate Banking Committee chairman William Proxmire (D-Wisc.) wanted the report out before the end of August.
In the past, the SEC has issued large investigative reports on such topics as the collapse of the Penn Central and unsafe and unsound broker-dealer practices that resulted in widespread reforms. The New York City report is expected to trigger a debate over the adequacy of the commission's regulation of municipal financings.
State and local government bonds and notes are not subject to the same financial disclosure requirements as corporate bonds and stocks - a subject that the report is expected to address.