Law and legal issues

Phillip D. Murphy, a former manager of municipal derivatives products at Banc of America Securities LLC, now Bank of America Merrill Lynch, was indicted by a federal grand jury on three counts of conspiracy and wire fraud in connection with a fraudulent scheme to rig bids for municipal-bond related investment agreements.

Mark Schwartz, who has represented the Harrisburg City Council since October and filed a Chapter 9 petition on its behalf, withdrew from its most recent filing from the Commonwealth Court, saying he has not been paid.

The former - and first - head of the Illinois Finance Authority Ali Ata received probation from a federal judge this week for his role in a state public corruption scandal that eventually landed former Gov. Rod Blagojevich in prison.

Compton, Calif. is facing serious cash flow problems that could force the city to declare bankruptcy, the city's elected treasurer said Tuesday.

Bankrupt Jefferson County has formally set its next hearing on sewer system rates for July 24, though no rate proposal is currently being considered.

City officials say the $102 million of cuts - made without union or city council approval - are needed to avoid "chaos" as the city is on track to go broke by Oct. 15.

The powerful nine-member financial advisory board that oversees Detroit's consent decree with Michigan undertook its first major action last week, approving $102 million of cuts proposed by Mayor Dave Bing.

The Michigan Supreme Court agreed last week to hear a simmering dispute over a ballot referendum to overturn the state's emergency manager law. The court set a date of July 25 for the hearing.

An appellate court has denied a motion by environmental groups to stay the Nuclear Regulatory Commission's approval of the construction and operating licenses for two new nuclear units at Plant Vogtle in Georgia.

A regulator will allow bond insurer MBIA Inc. to make a payment on surplus notes issued in 2008, the company said.

Executives from video-game company 38 Studios LLC admitted in bankruptcy court that their breakthrough game fell short of expectations.

Central Falls could exit bankruptcy by early September under a schedule to which unions, retirees and a bankruptcy judge agreed.

But the teetering city, frozen out of the capital markets and under national glare for paying employees the minimum wage in defiance of a court order, must agree to a revised recovery plan.

California should brace for more municipal bankruptcies as its local governments continue to strain under the weight of national and local economic policies, according to experts.

San Bernardino's City Manager said Thursday the city is still considering plans on whether to declare bankruptcy or to enter mediation with creditors.

The 11th Circuit Court of Appeals Thursday granted permission for nine petitioners to directly appeal federal Judge Thomas Bennett's ruling that stripped a state-court appointed receiver of the right to run Jefferson County's sewer system.

San Bernardino's surprise decision to file for bankruptcy, becoming the third California city to do so in less than a month, has shaken the municipal market and set up a likely showdown with bondholders.

Assured Guaranty Municipal Corp. Tuesday asked Jefferson County, Ala.'s bankruptcy judge to order the county to file a plan of adjustment by the end of September.

The broke city has yet another problem. It can't sell its sewer conveyance system to a local authority, as projected, because the authority has owned it since 1968.

An Ingham County judge shot down the Detroit Corporation Counsel's motion to reconsider the dismissal of a lawsuit that challenging the city's consent decree with the state. The decision removes one hurdle from the path of a badly needed bond transaction for the city.