Law and legal issues

California cities reeling from the California Public Employees' Retirement System plans to crank up rates over the next five years are looking for the exit door, but find the costs and the rules made by CalPERS make leaving all but impossible.

A federal judge granted class action status to an investor lawsuit accusing the former Morgan Keegan & Co. Inc. of securities fraud for its role in underwriting $39 million of defaulted bonds issued for a failed artificial sweetener plan in Moberly, Missouri.

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.

A Michigan board Wednesday voted to approve two emergency loans to cash-strapped Detroit suburbs, which are under state control, that will be used for pension payments.

Cathedral City officials have twice drawn on reserves this year to make bond payments on $12.3 million in community development district bonds issued to pay for instrastructure for the 1,362-unit Verano, a master-planned community in the Coachella Valley city.

Detroit officials could announce the future of emergency manager Kevyn Orr's role in the bankrupt city after his term ends Sept. 27. Some city council members reportedly favor a limited role to oversee the final weeks of the bankruptcy.

Bond insurer Financial Guaranty Insurance Co., standing alone as the last major creditor holding out in the Detroit bankruptcy, challenged the city's recent settlement with fellow insurer Syncora Guarantee Inc.

Indiana officials assured Hoosiers that the bankruptcy of the private operator of the Indiana Toll Road would not hurt the state, but one analyst warned that "aggressive" toll rates in the original lease could spell long-term problems.

Rhode Island Secretary of State Ralph Mollis intends to seek a steeper fine, if one is warranted, against a lawyer accused of wrongly lobbying for the 38 Studios financing bill.

The Detroit City Council Friday approved a new regional water authority to take over the bulk of the Detroit Water and Sewer Department and also gave the green light to the city's bankruptcy settlement with bond insurer Syncora Guarantee Inc.

A nonprofit legal coalition is suing Texas Attorney General candidate Ken Paxton, claiming he violated state securities law by failing to register as an investment adviser.

Any sale of the art in the Detroit Institute of Arts would make the DIA "persona non grata in the museum world," a museum official and an art finance consultant testified at a trial on the city's bankruptcy exit plan.

Indiana officials are watching closely as the private firm that operates the Indiana Toll Road under a historic $3.8 billion 75-year agreement reportedly teeters on the edge of bankruptcy and considers a sale of the lease.

The Michigan Strategic Fund approved the issuance of $450 million of 30-year bonds to finance a new hockey stadium near downtown Detroit, a transaction that will feature a mix of tax-exempt and taxable debt, a mandatory tender and interest-rate swaps.

The trustee for $6 million of unrated bonds issued for Iowa Wesleyan College will ask a judge to allow it to enter a forbearance agreement with the school ahead of an expected technical default on debt service coverage ratios.

The two counterparty banks on Detroit's interest-rate swaps no longer need to drop their claims against Syncora Guarantee Inc. after Syncora agreed to modify its settlement with the city.

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.

An attorney representing defendants in a Victorville, Calif. bond fraud lawsuit pleaded guilty in a separate case to charges of money laundering and witness tampering.

A former Wayne County chief financial officer is one of three county officials indicted Monday as part of an investigation into a $300 million bond-funded jail in downtown Detroit.

A court ruling striking down a vote by hoteliers approving a bed tax for a planned San Diego convention center expansion demonstrates the power of Proposition 13, Fitch Ratings said in a report.