CHICAGO - The Chicago City Council approved new rules that require underwriting, advisory, and legal firms that work on Chicago bond deals to report the racial, ethnic and gender makeup of the teams on their transactions.
The ordinance, introduced by City Council member Latasha Thomas earlier this year and co-sponsored by 18 other aldermen, cleared the council's Finance Committee Tuesday and won approval from the full council Wednesday. The ordinance takes effect 30 days after passage.
The aim of the ordinance is to use the city's fiscal muscle on bond deals to promote the hiring and advancement of minorities and women at non-minority and non-women-owned firms by holding up their staff makeup to greater scrutiny. The city issued $1.9 billion of bonds first half of the year and $1.5 billion last year, according to Thomson Reuters.
"Chicago has been very successful in providing minority entrepreneurs with opportunities through the city of Chicago's Minority Business Enterprise Program," Thomas said. "Now we would like to see firms go one step further by developing, training, and growing minority talent from within — and ultimately lay the foundation for minority leadership within internationally recognized majority firms."
Chicago has long followed and met a goal of doling out at least 25% its bond work to minority-owned firms and 5% to women-owned firms. Firms must submit information to the city to qualify for majority, minority-or women-owned status.
The new rules would apply to any law firm, financial advisor, or underwriter that provides professional services to the city on a bond offering, regardless of its ownership status.
The firm would be required to report to the city's chief financial officer the gender, role and race or ethnicity of those who will directly provide services for any particular transaction and the CFO would in turn share the information with the council. If a firm fails to accurately comply, it could lose out on city business.
The rules would extend to brokerage services provided to the city treasurer's office. For those services, the data would be reported to the treasurer.