Law and legal issues

WASHINGTON - The Municipal Securities Rulemaking Board later this week is expected to explore the possibility of consolidating the final two phases of its transparency system for short-term debt as well as providing more information about issuers' underlying credit ratings to investors.

BRADENTON, Fla. - A federal judge in Alabama last week indicated he's unlikely to decide immediately about whether to appoint a receiver to oversee Jefferson County's sewer system. Also last week, several state lawmakers offered up legislation aimed at helping the troubled county refinance its massive sewer debt load.

SAN FRANCISCO - The lawyers representing Vallejo, Calif., in its Chapter 9 bankruptcy case have a message for municipalities considering bankruptcy: It's no get-out-of-debt-free card.

The House and Senate budget committees yesterday began laying the groundwork for federal spending for the next five years, although any budget resolution resulting from the proposals in both chambers would not set legislative specifics and would only be intended as a blueprint.

WASHINGTON - The Municipal Securities Rulemaking Board yesterday asked the Securities and Exchange Commission to approve a continuing disclosure pilot phase for its EMMA site starting on or around May 11.

BRADENTON, Fla. - Alabama Gov. Bob Riley is once again asking the federal government to help Jefferson County restructure its $3.2 billion of troubled sewer debt.

DALLAS - A bill setting the first limits on campaign contributions in New Mexico is awaiting the signature of Gov. Bill Richardson, who is defending himself against claims of receiving "pay-to-play" money from the bond industry.

WASHINGTON - The Treasury Department proposed legislation yesterday that would allow the federal government to prevent the failure of large non-bank financial companies in severe distress that pose systemic risks to the economy, including those with municipal securities divisions. But it was not clear if the legislation would cover bond insurers, and market participants said it raised constitutional and other questions.

BRADENTON, Fla. - Two Jefferson County, Ala., commissioners yesterday again urged the county to for file municipal bankruptcy as it attempts to keep delaying a federal hearing that would determine if its debt-ridden sewer system should be place under the control of a receiver.

Congress should impose a fiduciary duty on all financial professionals who give investment advice regarding securities rather than settle for the plain-English, fair-dealing standard proposed by the securities industry, three groups said in a letter this week to lawmakers.

SAN FRANCISCO - U.S. Bankruptcy Court Judge Michael McManus pushed Vallejo, Calif., and its public employee unions to finalize negotiations on new contracts before he has to decide whether the city can reject its labor agreements.

If Congress decides to legislatively authorize federal regulation of independent, unregulated financial advisers, it should recognize that there are "fundamental differences" between them and dealer-affiliated advisers, the National Association of Independent Public Finance Advisers said in a recent letter to lawmakers.

The Financial Industry Regulatory Authority yesterday announced that it fined Wachovia Securities LLC and First Clearing LLC $1.1 million for failing to provide more than 800,000 notifications to muni bond and other investors over a five-year period ending in 2008.

WASHINGTON - The Securities and Exchange Commission yesterday announced panelists and the agenda for its April 15 roundtable on how to improve federal oversight and regulation of the credit rating agencies.

CHICAGO - A federal judge has appointed Michigan lead plaintiff representing stock- and bondholders in a class action lawsuit seeking to recover losses from investments in insurance giant American International Group Inc.

WASHINGTON - The Municipal Securities Rulemaking Board yesterday asked the Securities and Exchange Commission to approve rule changes that would allow it to begin fully operating primary market disclosure and trade price transparency systems on its EMMA site around May 11, culminating years of work to move to an all-electronic system for the primary market.

WASHINGTON - The Financial Industry Regulatory Authority has fined 25 broker-dealers, including J.J.B. Hilliard, W.L. Lyons Inc., nearly $2.15 million for failing to take timely or proper compliance action with regard to breakpoint discounts on mutual fund shares.

BRADENTON, Fla. - Georgia Secretary of State Karen Handel announced Thursday that investment banks will pay the state $8.5 million in fines in conjunction with auction-rate securities sold to individual, business, and institutional investors.

Settlement payments that back tobacco bonds would be cut by $160 million over a four-year period if the House approves a bill as early as this week, according to the Congressional Budget Office. But market participants think the legislation would not hurt, and possibly could even slightly benefit, tobacco bonds.

WASHINGTON - House lawmakers, in letters to federal regulators and legislation expected to be introduced today, are making a major push to help the municipal market, particularly for short-term instruments that issuers have struggled to sell.