SAN FRANCISCO — Treasurer Bill Lockyer said California has recouped $2.67 million in fees paid by municipal bond underwriters to industry lobbying groups from state bond proceeds.
Lockyer said in a statement Friday that the underwriters complied with his February request to reimburse the state for payments it made from bond proceeds to cover fees assessed on underwriters by the California Public Securities Association and the Securities Industry and Financial Markets Association.
“I’m grateful the banks cooperated and repaid this money. It’s unacceptable that taxpayers funded political activities of Wall Street banks and others,” Lockyer said in the statement. “It will not happen again.”
Lockyer said he has ended the practice.
Citi paid the most back to the state, for $480,000 in fees from 2007 to 2010, followed by Merrill Lynch at $430,000 for assessments collected in 2005 and from 2007 through 2010.
Lockyer said Lehman Brothers did not pay back $283,000 in fees and UBS Securities refrained from paying $65,000.
Tom Dresslar, a spokesman for the treasurers’s office, said California does not expect to get the money back from Lehman because of its obvious financial problems following its 2008 bankruptcy. UBS no longer does negotiated municipal underwriting.
According to Lockyer, in April 2010 CalPSA raised its assessment to 2 cents per $1,000 in bonds, up to a maximum $25,000 per deal, from 1 cent, and told members the extra penny would be allocated to its initiative campaign committee. SIFMA charges 3 cents per $1,000 of bonds.
SIFMA said in a letter Monday that it would no longer charge the fee and would move to a new assessment model.
In January, the Financial Industry Regulatory Authority launched a probe of CalPSA, asking member firms to answer a detailed list of questions that included queries about the group’s funding, organizational structure, and policies and procedures related to the Municipal Securities Rulemaking Board Rule G-37, which governs political contributions.
Following news of the investigation, Lockyer said he learned that the treasurer’s office had been allowing underwriters to pay CalPSA and SIFMA assessments out of bond proceeds since 2005.
