Enforcement

Issuers battling dealer firms over the right to seek arbitration to settle disputes over auction rate securities are planning to take their case to the Supreme Court now that a federal appeals court has ruled against them.

The Securities and Exchange Commission has charged Barclays Capital Inc. with failing to maintain an adequate internal compliance system after it acquired the advisory business of Lehman Brothers in September 2008.

Crystal City, Texas has reached an agreement with the Internal Revenue Service to settle tax rule violations and preserve the tax-exempt status of interest already paid on $13.94 million of jail bonds issued by an authority in 2003 and now in default.

Future Municipalities Continuing Disclosure Cooperation initiative settlements may offer more detail on the Securities and Exchange Commission's priorities and the SEC's Office of Municipal Securities may offer more municipal advisor rule guidance, commission officials said Thursday.

The Internal Revenue Service's tax-exempt bond office is modifying its market-segment approach to audits, the office's director, Rebecca Harrigal, said.

The Securities and Exchange Commission will probably use emergency court action to stop state and local governments from selling municipal bonds if it thinks their offerings are fraudulent, an enforcement division official told bond lawyers meeting here.

Bankruptcies in Jefferson County and Detroit as well as regulatory and enforcement actions have garnered increased scrutiny of the bond market in Washington, and market participants need to better understand the policy-making process, a Treasury Department official said.

A federal appeals court recently agreed with a lower court that former Miami budget director Michael Boudreaux does not have immunity from Securities and Exchange Commission charges, a decision some experts think could have implications for the SEC's Municipalities Continuing Disclosure Cooperation initiative or other enforcement actions going forward.

The National Association of Bond Lawyers has many ongoing projects, including completing an analysis of the long-term implications of a self-reporting disclosure enforcement program, commenting on the SEC's 2012 municipal market report, and providing regulators with its views on tax issues, said its incoming president Antonio "Tony" Martini.

The Financial Industry Regulatory Authority fined two firms a total of $31,000 dollars for violations of municipal securities rules, FINRA disclosed in the September monthly disciplinary actions it released Monday.

The Internal Revenue Service is auditing bonds issued in 2011 for a charter school operator in Chicago that settled securities fraud charges with the Securities and Exchange Commission in June.

The municipal market should benefit from the Securities and Exchange Commission's prosecution of Kansas for inadequate disclosure of faltering pension obligations, according to Moody's Investors Service.

A bipartisan House duo is threatening the Securities and Exchange Commission, warning it must further ease the Municipalities Continuing Disclosure Cooperation initiative for dealers before the Sept. 10 deadline for participation or they will step in with legislative action.

Connecticut State Rep. Diana Urban wants to create a results-based accountability report card for nonprofits to prevent further Amistad-type fiascoes.

The Puerto Rico Electric Power Authority's decision in its forbearance agreement to disclose certain information to only some its bondholders could put both PREPA and those investors at an increased risk of committing securities law violations, disclosure experts said Wednesday.

The Securities and Exchange Commission's Office of Compliance Inspections and Examinations has launched a program to scrutinize newly-regulated municipal advisors, the SEC announced Tuesday.

The Financial Industry Regulatory Authority censured and fined Greenwich, Conn.-based Interactive Brokers, Inc. was censured and fined $7,500 municipal securities trade reporting failures.

The Securities and Exchange Commission is investigating West Contra Costa, Calif. United School District and its general obligation bond financings dating back to 2009.

A group of bondholders trying to recoup their investment in a failed Moberly, Mo. artificial sweetener plant has added as a defendant Raymond James Financial Inc. — which acquired the bond deal's underwriter and lawsuit's original target.

The Fannin County Public Facility Corp. in Texas has settled tax law violations with the Internal Revenue Service by agreeing to pay $1.75 million and redeem all of the outstanding bonds from the $30.78 million it issued in 2008 to finance a jail.