Friday, May 17, 2019

Bond document - True but incomplete and misleading

On April 30, 2019 Lindsay Agostini resigned as Board Secretary of the Richland 2 School Board. She continues to serve as a Trustee of the School Board.

Her reason for resigning was the personal or civil risk she believed she might have, if she signed two documents associated with the half-Billion dollars in new bonds for the School District. For more detail about her resignation, click here.

Mrs. Agostini did not want to sign as Board Secretary on the Certificate of Incumbency. As Custodian of Official Records of the District, she was being asked to confirm McKie is Board Chair and to confirm McKie's dates of office as Board Chair as 7/1/2018 - 6/30/2019.

Mrs. Agostini did not want the personal risk of signing official documents that might not be true.

Mrs. Agostini also refused to sign the "Signature and No-Litigation Certificate" and she read the language of that addendum:

"The school district is aware that members of the public have called for the resignation of the current board chair because of fines owed by the board chair to the South Carolina State Ethics Commission and because the Board Chair did not have on file a current Statement of Economic Interest prior to being sworn into a second term as a member of the board. The school district is not aware of any litigation, regulatory effort or official proceeding challenging the board's right [sic] and title to serve as a board member or board chair.”

Mrs. Agostini and I have not spoken about these documents, and I have no idea what her attorney told her.

My opinion? 

While the wording is factually correct, it is incomplete and significantly misleading. She was right not to sign. 

I think it is a very dangerous act to mislead bondholders of a half-billion dollar set of bonds. If the underwriter knew the entire story, would they be nervous about selling these bonds? 

I was a Series 7 stockbroker years ago, and these addenda are red flags. Corporate bond purchasers do read prospectuses. Does the Richland 2 bond attorney really understand the serious questions about McKie?

Will Mr. Shadd protect himself by also refusing to sign?

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