The U.S. Securities and Exchange Commission has agreed to settle a securities fraud case against Oyster Bay for the town’s failure to disclose loan guarantees to investors.
Under the settlement, which is subject to judicial approval, the town will hire a court-appointed consultant for three years to review the town’s bond disclosures and recommend improvements to assure compliance with federal securities law.
In 2017, the SEC charged Oyster Bay and former Town Supervisor John Venditto with defrauding investors for initially failing to disclose the guarantees and later making “materially misleading” statements about them in its bond documents.
The SEC filed the terms of the settlement on June 7 in the U.S. Eastern District Court in Central Islip. The town board approved the general settlement terms in February.
The SEC said last week in a news release that its “litigation against Venditto continues.”
Venditto was acquitted of federal corruption charges last year related to the loan guarantees extended on behalf of former restaurateur Harendra Singh.
Venditto’s attorney, Marc Agnifilo, did not respond Thursday to a request for comment.
Earlier this year, town attorney Joseph Nocella said the town settled after "the parties finally came to an agreement that both could live with" and said in a memo it would increase investor confidence. Town officials did not respond Thursday to requests for comment.
The judge will appoint a consultant from among three candidates submitted by the town who are “not unacceptable” to the SEC, under the terms of the settlement. Once appointed, the consultant will have 120 days to issue a report recommending improvements to the town’s bond disclosures, according to the settlement. The town board will then adopt those recommendations or raise objections and attempt to negotiate potential alternative policies or procedures, according to the settlement. The consultant will then monitor implementation of the recommendations for two years.
The settlement prohibits town officials from saying they don’t admit the allegations without also stating they do not deny them. The town also cannot make public statements “denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis,” according to the settlement.
SEC spokeswoman Judith Burns declined to comment Thursday.