The Municipal Securities Rulemaking Board has received approval from the Securities and Exchange Commission to expand disclosures of contributions made by municipal securities dealers to bond ballot measure campaigns.
The new requirements are an effort to address the perception that dealers’ contributions to bond ballot campaigns, which secure voter approval for taxpayer-funded public projects, could influence the issuers’ awards of municipal securities underwriting business to those dealers, the MSRB said in a release.
“Even the appearance of pay-to-play in the municipal bond market can undermine public confidence,” said MSRB executive director Lynnette Kelly. “Requiring more disclosure about dealers’ bond ballot contributions will shine light on potential connections between dealers’ financial contributions and the awarding of bond business.”
The SEC action came on the heels of a request from California Treasurer Bill Lockyear to the state attorney general two weeks ago requesting an opinion as to whether school districts awarding business to underwriters in exchange for school ballot campaign contributions violated state law. Lockyer wanted to know if school districts are violating state law by using public funds for bond ballot campaign services, such as when bond fees are used to reimburse underwriters for contributions.
The new disclosure requirements will make public the timing of dealer contributions and the identity of the issuer of the voter-approved bonds, as well as the related underwriting by the dealer. The requirements take effect July 1 and the disclosures will be posted to the MSRB’s EMMA website.