Bond lawyers meeting in San Francisco felt the pang of sequestration when two Securities and Exchange Commission muni enforcement officials were unable to attend due to travel budget cuts, but other panelists predicted a flurry of enforcement activity in federal whistleblower programs and after the municipal advisor definition becomes available.

Neither Elaine Greenberg nor Mark Zehner, the chief and deputy chief of the Securities and Exchange Commission's enforcement division's muni and public pensions unit, were able to attend the National Bond Lawyers Association's 13th annual Tax and Securities Law Institute due to sequestration. The two had been scheduled to talk to NABL members about pay-to-play and other municipal enforcement issues.

In their absence, Bingham McCutchen LLP attorney W. Hardy Callcott told attendees that they can probably look forward to more investigations like the one against former Goldman, Sachs & Co. vice president Neil Morrison in Massachusetts, after which the company agreed to pay $14.5 million to settle charges that Morrison engaged in pay-to-play practices while working for the firm. More investigations are the natural result of a specialized unit, Callcott said.

"If you create a municipal securities and public pensions unit, you can expect more cases involving municipal securities and public pensions," he said.

Callcott also advised bond lawyers that more activity could arise from the SEC's whistleblower office, since whistleblowers have a huge financial incentive to come forward and report violations. If a tip pans out, and at least $1 million in damages are collected, the whistleblower is entitled to as much as 30% of those damages, and at least 10%.

"Those of us who do enforcement defense think that will have a significant impact," Callcott said.

Sam Israel, associate vice president and chief counsel in the enforcement department at the Financial Industry Regulatory Authority, said that bond attorneys have been whistleblowers at both the SEC and FINRA informing the agencies of possible abuses, but that lawyers are not encouraged to violate attorney-client privilege in any way.

Israel said FINRA is looking into more cases involving violations or rules related to bond ballot contribution disclosures and gifts.

"I could see down the road, actions," he said.

Paul Maco, a lawyer at Bracewell & Giuliani in Washington, D.C. chaired the panel, and prompted discussion about what will happen when the long-awaited municipal advisor definition comes into being. Right now, he reminded the group, some entities are unsure whether they are MAs or not, but will come under the microscope once the SEC releases its rule.

"Once they know who they are, they will be inspected," Maco said.

Callcott said the Municipal Securities Rulemaking Board would probably move quickly to issue its own rules following the SEC definition becoming available.

"We expect the MSRB to spring into action," he said.

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