The Securities Industry and Financial Markets Association is challenging a key claim of the Securities and Exchange Commission's suit against three Alabama individuals by arguing that the SEC does not have oversight of interest rate swaps based on its municipal swap index, claiming it is an index of interest rates, not securities.

In a 166-page friend-of-the-court filing late Thursday, SIFMA said that the commission's case against Birmingham Mayor Larry Langford, broker-deal William Blount, and lobbyist Al LaPierre in connection with Jefferson County, Ala.'s lucrative municipal bond and swap deals represents an "inappropriate expansion" of its antifraud regulations to non-securities-based swaps. The industry group made the filing with the U.S. District Court for the Northern District of Alabama, which is deciding whether to dismiss the suit filed in late April by the SEC.

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