Harvard Updates Bond Documents To Warn of Material Adverse Effect
Lawsuits, “charges“ may ensue
Late in the day on April 15, Harvard updated offering documents for its April 9 attempted $750 million taxable bond offering to warn of the federal government’s “freeze on $2.2 billion in multi-year grants and $60 [million] in multi-year contract value to Harvard University.”
The “additional considerations” section now states: “Further developments in these and other matters are likely, which may include but are not limited to legal actions such as audits, investigations, lawsuits, charges, or other proceedings. The impact of any such developments or matters is not known, but there may be a material adverse effect on the University’s business, reputation, financial profile, and operations.”
The reference to “charges” typically refers to criminal proceedings.
In 2023, during the Biden administration, the former chair of Harvard University’s Chemistry and Chemical Biology Department was sentenced in federal court in Boston for lying to federal authorities about his affiliation with People’s Republic of China’s Thousand Talents Program and the Wuhan University of Technology in Wuhan, China, as well as failing to report income he received from WUT. In 2020, the federal government also brought criminal charges against the former Harvard fencing coach and a Maryland businessman in an admissions-related bribery case, on which they were found not guilty during the Biden administration, which had continued prosecuting the case.
The date of issuance of the taxable bonds was April 16, 2025. Their offering documents had originally said, “while the financial impact on the university of any developments at the federal level cannot be quantified at this time, they may, directly or indirectly, have a material adverse effect on the current and future financial profile and operating performance of the University.”
The new supplement said that section “is hereby deleted and replaced in its entirety” with the new language.
Since this wording change occurred on the day after the federal government announced a freeze on $2.2 billion of grants and contracts, the wording change is likely to be referring only to that and not to any additional brewing problems. The wording may have gotten embellished by the lawyers, making it more expansive, but it is likely just more defensive, as lawyers tend if unrestrained.
The Harvard Crimson reports that the Harvard-associated hospitals were exempted from the funding freeze: https://www.thecrimson.com/article/2025/4/16/funding-pause-not-hospitals/. When I was in a Harvard Medical School department, my grants were through Harvard, but when I moved to Children's Hospital, my grants were administered by the hospital. This separation, unusual compared to other medical centers, may protect much of the research at Harvard hospitals from the actions of other parts of Harvard, where many oppose not only the unreasonable demands from the Trump administration but also the reasonable ones.