ORLANDO - To save costs, a number of underwriters are choosing to forgo having their counsel write so-called 10b-5 letters that certify there are no material omissions or misleading statements in the issuer's official statement for its municipal bonds. Instead, the underwriters are relying on such letters written by an issuer's disclosure counsel, bond lawyers meeting here said last week.

By not hiring counsel to write their own separate 10b-5 letters - as they normally would - the underwriters are outsourcing to the issuer's counsel one element of their due diligence and possibly creating a liability gap from the perspective of a plaintiff's lawyer or Securities and Exchange Commission enforcement staff, said several bond attorneys at the National Association of Bond Lawyers' Tax and Securities Law Institute who asked not to be named.

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