Law and legal issues

WASHINGTON - The Securities and Exchange Commission yesterday fined Jersey City, N.J.-based Wolfe & Hurst Bond Brokers and a former broker $25,000 each and barred the broker from the securities industry for at least one year for manipulating bids-wanted auctions for municipal bonds.

New York City Comptroller William Thompson is urging Securities and Exchange Commission chairman Mary Schapiro to implement a comprehensive ban on political contributions from investment advisers who are compensated for providing services to public pension funds.

The Municipal Securities Rulemaking Board has drafted rule changes to address an issue that surfaced when Lehman Brothers filed for bankruptcy last year and profits were withheld from syndicate members in municipal bond transactions senior managed by that firm.

SAN FRANCISCO - Standard & Poor's rated Half Moon Bay, Calif.'s judgment obligation bond issue AA-minus, saying strong financial management and high wealth levels offset the weight of a looming settlement payment.

WASHINGTON - Medicare and Social Security trust funds will run out of money in 2017 and 2037, respectively - two to four years earlier than previously projected - because of the recession, trustees concluded in annual reports sent to Congress.

President Obama's budget proposes to hike the marginal tax rates of the wealthy to 36% and 39.6% beginning in fiscal 2011, and to increase by 5% the capital gains and dividends tax rate for the wealthy - tax changes that market participants say could lead to higher demand for tax-exempt bonds.

The Municipal Securities Rulemaking Board's proposed access-equals-delivery system would require dealers to "undertake an enormous amount of expense" to accommodate customers' standing requests for paper copies of primary offering documents, the Securities Industry and Financial Markets Association is warning.

WASHINGTON - Securities and Exchange Commission chairman Mary Schapiro said Friday that she favors the creation of a council of existing regulators to oversee risk in the financial markets, rather than granting that authority to a single regulator.

BRADENTON, Fla. - Jefferson County, Ala., commissioner Jim Carns Friday said he was "extraordinarily encouraged" that the Securities and Exchange Commission had approved enforcement action against JPMorgan for securities law violations involving the county's bond and swaps sales.

DALLAS - The $144 million of outstanding bonds for Glendale, Ariz.'s National Hockey League arena should withstand the loss of the Phoenix Coyotes in the short term, but the vacancy will add pressure to the city's finances, Moody's Investors Service analysts said.

A federal judge in New York City has dismissed most of the class action claims filed last year by five municipal issuers that alleged Wall Street and other firms engaged in a secret, anticompetitive price-fixing conspiracy of municipal derivatives and guaranteed investment contracts.

SAN FRANCISCO - Half Moon Bay, Calif., may sell judgment obligation bonds to pay off a debt to a developer that has caused speculation that the city could be forced to declare bankruptcy.

SAN FRANCISCO — Municipal bankruptcy rumors have swept California since the city of Vallejo sought Chapter 9 protection from creditors last year.

BRADENTON, Fla. — Lawmakers representing Jefferson County refused to allow the full Alabama Legislature to debate a bill that would have helped the county restructure nearly $3.2 billion of troubled sewer debt. The bill allowing for a diversion of sales tax revenue was seen as the county’s best hope for avoiding what would be the nation’s largest ever municipal bankruptcy.

The Municipal Securities Rulemaking Board announced yesterday that it will not be able to launch its primary market disclosure "access-equals-delivery" system or its continuing disclosure test pilot on May 11, citing filing and approval delays.

DALLAS - A bankruptcy filing by a National Hockey League team with plans to return to Canada leaves Glendale, Ariz., with a six-year-old arena and $180 million of debt amid a worsening recession.

WASHINGTON - House Financial Services Committee chairman Barney Frank plans to hold a hearing May 21 on an omnibus municipal bond bill his staff is drafting that is expected to include a provision to impose a "fiduciary" standard on financial advisers in the muni market.

SAN FRANCISCO - The sponsor of a California bill to limit the ability of municipal bond firms to participate in bond referendum campaigns has put the measure on ice.

The Municipal Securities Rulemaking Board announced yesterday that on May 11 it will make several technical enhancements to its short-term obligation rate transparency, or SHORT, system for auction-rate securities and variable-rate demand obligations,.

In response to the range of negative pressures on housing finance, Fitch Ratings said in a report yesterday that it will begin assigning specific rating outlooks to various credits within the state housing finance sector, after giving the sector a negative outlook in general.