Municipal advisor Brandon Comer and his firm Comer Capital Group have responded to the Securities and Exchange Commission's argument against summary judgment in Comer's favor, claiming the SEC has not provided sufficient evidence.
That's the latest in Securities and Exchange Commission v. Comer Capital Group and Brandon Comer, where the Commission alleges that Comer breached his fiduciary duty in connection with a 2015 bond offering by the Harvey, Illinois Public Library District.
"Plaintiff's case is all second-guessing and no facts or law," Comer's reply said. "Plaintiff essentially argues that this Court should deny defendants' Motion for Summary Judgment because question of fact exists as to whether defendants requested (underwriter) IFS negotiate a fee increase with the district on defendants' behalf and whether defendants failed to reasonably assist the district to obtain favorable financing terms."
"Plaintiff however fails to provide evidentiary support for their arguments," the reply said. "This court should grant defendants' motion for summary judgment."
Comer's motion for
The SEC's case against comer alleges that Comer was failed in his fiduciary duty to the issuer, having been brought in by IFS, which was underwriting the deal, and failing to protect the district from unfavorable borrowing terms. The SEC alleged that comer worked with the underwriter to negotiate a fee increase for himself.
In addition to Comer's argument stating the Commission has not provided sufficient evidence that Comer asked IFS to negotiate a fee increase, which is "the entire basis for Plaintiff's conflict of interest argument," the reply said, but they also fail to point to any comparable bond issue.
"Plaintiff attempts to argue that the yield at which the District Bond's were sold (5.05%) far exceeded the yield of contemporaneous comparable bond issuances within Illinois (between 3.1% and 3.78%) to use this comparison as evidence that defendants did not reasonably assist the district in obtaining favorable financing terms," the response said.
The Commission pointed to issuances by other counties, such as McHenry County, Adams County, Butterfield Park District, Morgan Sangamon Etc. Counties and Joliet Park District, but Comer claims the argument fails "because none of the issuances to which Plaintiff points are comparable."
Comer continued to argue that the underlying ratings are different for all of the counties except McHenry and provided graphs showing that the tax base and tax collections for which the district receives funds are starkly different.
Comer also contests the SEC's assertions that the price of the bonds were not fair and reasonable and again states that the Commission does not provide sufficient evidence and that the argument fails.
"Just because the Bonds' price rose and yield tumbled (to 4.0%) in the secondary market does not prove the district received a much higher cost of funds than it should have," Comer argued.
Comer also argued that discussion regarding his fee do not constitute a breach of fiduciary duty as there is no evidence of the discussion and "no jury could find IFS discussing defendants' fee with the district as undisclosed material information necessary to evaluate the objectivity of defendants' advice."
Comer concluded by stating the Commission cannot succeed in this case, and requested that the Court grant summary judgment in his favor.
Comer's lawyer James Kopecky did not respond to requests for comment.
