ALAMEDA, Calif. — The primary lobbying group for municipal underwriters in California is under investigation by the Financial Industry Regulatory Authority.

California Public Securities Association members received letters last week from FINRA, asking them to answer questions and supply related documents as part of an investigation “to determine whether violations of the federal securities laws or FINRA, NASD, NYSE, or MSRB rules have occurred.”

The CalPSA claims “approximately 35” member firms, and “serves as the focal point for the public finance industry’s relationship with California’s Legislature,” the organization says on its website.

FINRA is asking member firms for 25 different answers, ranging from details on CalPSA’s budget, organizational structure, finances, and decision making processes. The request includes correspondence related to CalPSA’s two affiliated California political action committees. The firms are also asked for both their own and the CalPSA’s policies and procedures related to Municipal Securities Rulemaking Board Rule G-37, governing political contributions.

“I would be hard pressed to see anything but a G-37 component” to FINRA’s investigation, said the MSRB’s former executive director, Christopher “Kit” Taylor, who said he had no specific knowledge about the inquiry.

The CalPSA retains lobbying firm Aaron Read & Associates, and paid it $228,037 during the 2009-2010 session of the Legislature, according to disclosure documents the firm filed with the Secretary of State.

“We engage the services of a legislative advocate to monitor developments and legislation which may have an effect on the ability of our members to conduct their businesses,” CalPSA says on its website. “When necessary, we provide input into the drafting of such legislation so that it does not unduly restrict the use of legitimate financial products and techniques that help us to serve our clients.”

CalPSA’s chairman, Jim Cervantes of Stone & Youngberg, did not return a phone call Tuesday morning.

The CalPSA’s two primary political action committees have made substantial contributions to several statewide ballot measure campaigns.

In 2010, according to campaign finance disclosure documents, the California Public Securities Association - Public Policy Issues Fund contributed to two ballot measure campaigns: $150,000 toward the unsuccessful effort to defeat Proposition 26, which imposed new two-thirds supermajority rules on the imposition of fees, and $250,000 toward the successful Proposition 22 campaign, which limits the state government’s ability to shift tax money from local governments and agencies to its own coffers.

The PAC, according to campaign finance records, reported receiving $364,012 in contributions during 2010 from 17 different broker-dealer firms.

The main thrust of G-37 is to limit contributions from brokers to political officials.

FINRA’s request focuses on information from the period from Jan, 1, 2006, onward. In that time, California campaign finance records show one contribution to an individual candidate: $2,300 in 2006 to the state Senate campaign of Jenny Oropeza, from CalPSA’s other affiliated PAC, the California Public Securities Association Political  Action Committee. That PAC has not reported any campaign contributions since 2006.

Oropeza, a Long Beach Democrat, won the 2006 election and went on to chair the Senate’s revenue and tax committee. She died in office last October.

But contributions to ballot measure campaigns could be of conceivable interest to regulatory enforcers, Taylor said.

“Whenever you have money flowing from the dealer community to some sort of political effort, you have to concern yourself with it,” he said.

“You have to tie the money to someone in a municipality or the state who’s in a position to award business,” Taylor said.

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