Law and legal issues

WASHINGTON — The National Association of Bond Lawyers is questioning whether a Municipal Securities Rulemaking Board proposal to specially designate issuers that undertake any of four types of voluntary initiatives may have the unintended effect of misleading investors about the creditworthiness of the issuers' securities.

New York State Attorney General Andrew Cuomo Monday filed fraud charges against Charles Schwab & Co., alleging it misled investors about the risks of auction-rate securities.

Two New York-based broker-dealers - Chapdelaine & Co. and Whitaker Securities LLC - agreed to pay a total of $30,000 to settle muni trade rule violations, the Financial Industry Regulatory Authority announced yesterday.

WASHINGTON - The Governmental Accounting Standards Board on Friday urged market participants to submit written comments on exposure drafts on health care and other post-employment benefit plans and Chapter 9 bankruptcies by Aug. 28.

WASHINGTON - The Municipal Securities Rulemaking Board has a disclosure system and fair-dealing rule that should be considered in any regulatory regime established for derivatives, the MSRB told Treasury Secretary Timothy Geithner last week.

The Treasury Department's draft derivatives bill contains a technical glitch that renders meaningless a provision that was intended to restrict small municipalities from participating in derivatives transactions, several lawyers said late last week.

WASHINGTON — The Municipal Securities Rulemaking Board has filed a proposed rule change with the Securities and Exchange Commission that would raise the board’s annual fee for municipal securities firms to $500 from $300 on Oct. 1 and generate an additional $280,000 for the board for fiscal year 2010.

WASHINGTON - The first industry groups to comment on two Municipal Securities Rulemaking Board proposals tied to its EMMA disclosure system are warning that they may be unfair or unduly burdensome in certain respects.

BRADENTON, Fla. - Alabama's House yesterday passed a bill authorizing a new occupational tax for Jefferson County and another bill requiring the county to hire a comptroller and a manager.

Public power utilities that issue tax-exempt and taxable debt to finance projects would like the massive climate bill pending in Congress to include tax-exempt, as well as taxable, debt in its credit enhancement provisions. The bill, introduced May 15 and co-sponsored by Reps. Henry A. Waxman, D-Calif., and Edward J. Markey, D-Mass., would create a Clean Energy Deployment Administration that could provide credit support to taxable debt obligations sold by state, local, and private-sector entities to finance "clean energy" projects. The credit enhancement could take the form of direct loans, letters of credit, loan guarantees, insurance, or purchases of debt instruments. The bill is pending in the Senate.

SAN FRANCISCO - Vallejo, Calif.'s public employee unions have given up on getting the city tossed out of bankruptcy court.

The two broker-dealer trade groups are taking opposite stances on the Municipal Securities Rulemaking Board's proposal to require dealers to disclose contributions to bond ballot campaign committees to the MSRB.

WASHINGTON - Several members of the Senate Banking Committee yesterday warned that the Obama administration's proposal to regulate credit rating agencies does not go far enough to ensure the agencies use reliable information to determine ratings.

WASHINGTON - The Securities and Exchange Commission yesterday released its proposed pay-to-play restrictions for investment advisers and has set an Oct. 6 deadline for public comments, including on whether the curbs should be expanded to include contributions to charities and other institutions closely affiliated with elected officials.

BRADENTON, Fla. - The Bank of New York Mellon on Monday filed a civil suit in Alabama state court seeking a receiver for Jefferson County's sewer system as well as a court order requiring county commissioners to raise sewer rates and impose additional charges and fees to pay bondholders.

The Securities Industry and Financial Markets Association has hired former U.S. Rep. Kenneth E. Bentsen Jr. as head of its office here and as executive vice president of public policy and advocacy.

WASHINGTON - The National League of Cities is urging the Treasury Department to purchase "troubled assets" resulting from Lehman Brothers' bankruptcy filing that are still held by local governments.

CHICAGO - The effort to legalize casino gambling in Ohio advanced last week when the state Supreme Court rejected a challenge to a ballot proposal that would allow casinos in the state's four largest cities.

Although some industry officials warn that the Securities and Exchange Commission's proposal to restrict investment advisers from pay-to-play practices would be draconian, an SEC official said yesterday that there does not seem to be an effective alternative.

BRADENTON, Fla. - Albert LaPierre today will enter a guilty plea in Alabama federal court to one count each of conspiracy and filing a false tax return stemming from last December's 101-count, pay-to-play criminal indictment related to Jefferson County, Ala's sewer bond deals.