Law and legal issues

WASHINGTON — The Financial Industry Regulatory Authority has censured and fined Merrill Lynch, Pierce, Fenner & Smith Inc. $500,000 for failing to establish and maintain written supervisory procedures to ensure that its representatives considered customers’ state income-tax benefits in their suitability analyses of 529 college saving plans.

CHICAGO — American Airlines and United Airlines on Tuesday sued Chicago to block its financing of remaining projects under an $8 billion expansion program at O’Hare International Airport ahead of the city’s planned sale of $1.1 billion of passenger facility charge-backed bonds next month.

WASHINGTON — The Financial Industry Regulatory Authority fined TD Ameritrade Inc., Scottrade Inc., and Fidelity Brokerage Services LLC $35,000 each for failing to disclose the underlying ratings of insured bonds, which it said constituted material information that customers purchasing the bonds needed to know.

CHICAGO — American Airlines and United Airlines on Tuesday sued Chicago to block its financing of remaining projects under an $8 billion expansion program at O’Hare International Airport ahead of the city’s sale of $1.1 billion of passenger facility charge-backed bonds next month.

ALAMEDA, Calif. — Faced with a $30 million legal judgment after losing two rounds in court, the financial fate of the small ski resort town of Mammoth Lakes is in the hands of the California Supreme Court.

Harrisburg’s $56 million 2011 budget remained uncertain Friday afternoon as Mayor Linda Thompson continued to review the spending plan.

Recurring losses from operations, a net-asset deficiency, and negative working capital are among the financial shortfalls revealed in a recent independent audit by KPMG LLC of the Resurrection Nursing Home, a nonprofit facility in Castleton, N.Y.

WASHINGTON — The Municipal Securities Rulemaking Board is expected early Friday to propose extensive pay-to-play restrictions for municipal advisers, the first significant rulemaking proposal for advisers since the MSRB began to oversee them on Oct. 1.

WASHINGTON — The Securities and Exchange Commission will hurt state and local entities if it adopts rules requiring their appointed board members to register with the SEC and possibly the Municipal Securities Rulemaking Board, market participants are warning.

Harrisburg could receive a financial recovery plan by ­­mid-May as Pennsylvania ­Wednesday announced that Novak Consulting Group will head a team of advisers to work with city ­officials on a fiscal strategy.

CHICAGO — Indiana lawmakers Wednesday morning held a first hearing on a bill that would allow local units of government to file for Chapter 9 bankruptcy protection.

CHICAGO — After years of perceived mismanagement and allegations of corruption, a new administration has taken over the helm of Cook County, Ill. with fiscal responsibility as its mantra.

SAN FRANCISCO — Oakland’s city attorney has taken a public stand against a plan by the city to sell bonds so it can continue to skip making payments toward growing public-safety pension liabilities.

Shares of MBIA Inc. jumped more than 10% Tuesday after a New York appeals court dismissed a lawsuit that had contested the company’s February 2009 restructuring.

The Hamtramck City Council was poised Tuesday to approve a resolution seeking a $2.5 million loan from Michigan to help pay its bills even as it continues to push the state to allow it to become the first Michigan municipality to file for bankruptcy.

Ambac Assurance’s bid to protect its municipal bond insurance book from the Internal Revenue Service faces a daunting hurdle in federal court as the U.S. government argues it has every right to collect taxes it is owed regardless of how the company structures itself.

Moving money market funds to a floating net-asset value would cause investors to flee the funds and ultimately deprive state and local governments of needed capital, several municipal market groups are warning in a letter to the Securities and Exchange Commission.

ALAMEDA, Calif. — Holders of Chowchilla, Calif.’s 2005 lease revenue bonds will get their most recent interest payment, after the trustee emptied out the last of the debt-service reserve fund.

CHICAGO — Sylvan Township, Mich., will likely need to impose a steep property-tax hike on its residents to cover payments on bonds that were issued to support a now-failed special assessment district.

SAN FRANCISCO — Vallejo, Calif., is on track to submit a plan to a federal judge next week to exit the largest municipal bankruptcy in more than a decade.