We are replying belatedly to Michael Decker's commentary calling for greater regulation of the municipal bond market, "It's Time to Close the Financial Adviser Loophole," on April 6.
Mr. Decker draws on all his righteous indignation to malign advisers for their "egregious" and "nefarious" activities - and who's to blame him?
However, he should be careful where he points his vocabulary. Our firm, CDR Financial Products, is one of the pioneers of financial risk management and advisory services for the public finance market. Over the past 22 years we have been involved in hundreds of transactions, helping state and local issuers develop sound hedging and other strategies to support their financings. Our proprietary models for real-time pricing and valuation of derivatives and investments have saved municipalities across the country many millions of dollars in their funding programs.
Mr. Decker is being especially reckless when he states that we have "been involved in a string of bond transactions that may get local governments or investors - or both - in hot water with the Internal Revenue Service."
While we have been named in news reports in connection with government investigations into muni market practices, so have some 40 other firms, including many of the country's most iconic investment banks, insurance companies, and broker-dealers. To suggest that we have been singled out for a crackdown on industry-wide practices is akin to picking out a solitary fish caught in the net of a tuna boat's haul and exclaiming, "Ah hah! that's the one we wanted!"
While Mr. Decker has been up on his high horse, we've been on the ground, working with clients to minimize their risk exposures and maximize the value of their portfolios. We have long supported calls to further regularize the industry with respect to fees, selection process, disclosure, the use of consultants, and yes, even political contributions.
Mr. Decker is eloquent in voicing his concern for local governments that have become casualties of the recession and credit crisis. We endorse his calls for regulatory reform. But we appeal to him to take greater care in whom he chooses to characterize as "rogue FAs."
David Rubin, principal
CDR Financial Products
Beverly Hills, Calif.
