Law and legal issues

Some California cities may have their bond-issuing abilities limited by a bill introduced last week by lawmakers responding to the crisis in Bell, where freewheeling financial policies have resulted in the resignations of three city officials.

Many California government employees are off without pay today, after the state Supreme Court said that Gov. Arnold Schwarzenegger could implement his order furloughing workers for three Fridays per month.

U.S. District Judge James B. Zagel told attorneys in the corruption trial of former Illinois Gov. Rod Blagojevich to be back in court Aug. 26 to set a date for a new trial.

The Securities and Exchange Commission on Wednesday for the first time charged a state — New Jersey — with violating securities fraud laws by failing to disclose to bond investors that it was underfunding its two largest pension plans.

Central Falls, R.I., plans to sell $2.1 million of deficit bonds to balance its budget under an austerity plan released by its state-appointed receiver Wednesday.

The Santa Rosa Bay Bridge Authority could deplete its debt-service reserve in the current fiscal year, which could result in a payment default next July, Florida Department of Transportation officials said Wednesday.

Jefferson County commissioners last week hired Warren, Averett, Kimbrough & Marino LLC to audit fiscal year 2008, which ended Sept. 30, 2008.

Alabama Gov. Bob Riley signed an executive order last week capping compensation for lawyers representing the state just hours before Attorney General Troy King filed two lawsuits against BP PLC and other companies for negligence in the Gulf oil disaster.

Barclays Capital Inc. wants to patent a computer system that would generate several municipal bond indexes, but a recent Supreme Court ruling could have an impact on the application's viability.

The looming foreclosure on a downtown Cleveland landmark could have implications for tax increment financing debt sold for the project and TIF-backed borrowings across the state and nationally, say some Ohio bond attorneys.

The Municipal Securities Rulemaking Board Tuesday said it is contemplating a rule change that would prohibit dealers from underwriting new negotiated or competitive bond issues if they served as the issuer's financial adviser on the transaction.

The U.S. Chamber of Commerce is challenging in federal court the Environmental Protection Agency's ability to regulate greenhouse gas emissions under the federal Clean Air Act.

Federal prosecutors late Tuesday afternoon said they would likely retry former Illinois Gov. Rod Blagojevich after a jury was able to reach a unanimous verdict on only one of 24 counts brought against him.

Fitch Ratings dropped its ratings on Bell to junk Tuesday, as the small Southern California city continued to reel from its unusual financial practices, which included paying a former city administrator almost $800,000 a year.

The Financial Industry Regulatory Authority has fined three firms $242,500 for municipal rules violations. They include $150,000 against Raymond James Financial Services for supervisory failures related to so-called 529 college savings plans it sold to clients.

Moody's Investors Service reiterated Monday that the possible bankruptcy of Ambac Financial Group is unlikely to affect policyholders of its bond insurer subsidiary. In addition, policyholders will benefit from recent growth in the insurer’s statutory surplus, the rating agency said.

The Securities and Exchange Commission late Friday approved a controversial set of rule changes floated by the Municipal Securities Rulemaking Board that will dictate the priority of retail and other customer orders in primary offerings, as well as dealers' related record-keeping responsibilities.

WASHINGTON — The South Carolina Department of Transportation is challenging the Connector 2000 Association Inc.’s Chapter 9 bankruptcy filing, delaying efforts to restructure $369 million of the agency’s toll road bonds that went into default at the beginning of the year.

WASHINGTON — Martin Kanefsky is the second broker of muni investment agreements that the Justice Department has taken action against, after CDR Financial Products, which the government indicted in October on nine criminal counts over alleged bid-rigging of muni investment and derivatives contracts.

Representatives of Menasha, Wis., and holders of $23 million of defaulted steam-plant bond anticipation revenue notes failed to reach an agreement during a mediation session earlier this month but will try again in September, officials said.