Law and legal issues

BRADENTON, Fla. - The firm hired last week by Jefferson County, Ala., to lobby for a federal backstop or guarantee to help restructure the county's nearly $3.2 billion of troubled sewer debt has declined to do so.

WASHINGTON - The Municipal Securities Rulemaking Board this week plans to send to key lawmakers and federal regulators recommendations for regulating guaranteed investment contract brokers and financial advisers in the municipal market that are not currently subject to regulation.

President Obama is expected to soon sign into law a bill approved by the Senate late Thursday that would expand the State Children's Health Insurance Program and raise tobacco taxes, prompting concern in the muni market about debt service payments on tobacco bonds nationwide.

Legislation introduced Thursday by Sens. Charles Grassley, R-Iowa, and Carl Levin, D-Mich., would give the Securities and Exchange Commission the authority to regulate municipal or other hedge funds with $50 million or more in assets.

WASHINGTON - Rep. Gerald Connolly, D-Va., pledged to be an "unwavering advocate" on behalf of municipal issuers Friday and said he would work with other lawmakers to draft legislation or prod federal agencies to provide assistance to the muni market with the aim of luring investors back to it.

A Government Finance Officers Association committee approved three recommended practices documents at its winter meeting here last week, including one that urges issuers to hire financial advisers when pricing bonds in negotiated sales and another that says finance officers should play "a central, functional role" in teams exploring or negotiating privatization projects.

BRADENTON, Fla. - The Palm Beach County, Fla., Commission is being urged to delay approval of a financial adviser's contract in light of a series of alleged bond-related misdeeds that led to the resignation of one commissioner and a guilty plea by her underwriter husband.

CHICAGO - The Illinois Senate unanimously voted 59 to 0 to remove Gov. Rod Blagojevich from office for abusing his power, following a four-day impeachment trial during which senators heard what they described as "damning" evidence that he broke the law and sought to trade jobs, legislation, and President Obama's Senate seat for personal gain.

WASHINGTON - Market participants are urging Treasury Department and Federal Reserve officials to create a post for a municipal market expert or "czar" who would provide knowledge about the market and its needs to the administration's policymakers, and some of those officials appear to be open to the idea.

The North American Securities Administrators Association yesterday called for Congress to regulate derivatives and hedge funds as well as impose a fiduciary duty on all investment professionals.

BRADENTON, Fla. - The federal judge presiding over the criminal case against Birmingham, Ala., Mayor Larry Langford and two of his friends in the bond business has scheduled a conference call for Wednesday to discuss the status of the case.

SAN FRANCISCO - California officials say the state has done enough to fix health care at its prisons and a federal court should dismiss a receiver who has ordered the state to spend $8 billion to build and renovate prison hospitals.

WASHINGTON - The Investment Company Institute, the group that represents mutual funds and other investment companies, is pushing for improvements to municipal disclosure, which it generally considers limited, non-standardized, and stale.

BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday approved a pared-down contract to hire Washington-based Book Hill Partners LLC to lobby for federal financial aid amid controversy about the expense of such an action.

WASHINGTON - The Municipal Securities Rulemaking Board is expected this week to discuss whether to change its Rule G-37 to restrict broker-dealer contributions to campaign committees that urge voters to approve ballot measures for new muni bond issues.

CHICAGO - The Illinois Senate yesterday opened its historic impeachment trial of Gov. Rod Blagojevich as the governor took to the national airwaves in a series of talk-show and news interviews, in which he proclaimed his innocence on corruption charges and argued lawmakers want him out so they can raise taxes.

SAN FRANCISCO - Vallejo, Calif., has tentatively agreed to contract changes with its police union, the first breakthrough in months of negotiations on a plan for the city to exit bankruptcy.

SAN FRANCISCO - California Attorney General Jerry Brown is investigating allegations of bid-rigging in sales of derivatives and guaranteed investment contracts to municipalities.

Mary Schapiro, who is poised to be sworn in today as the chairman of the Securities and Exchange Commission, will push to broaden the agency's responsibilities as well as to boost its funding levels, she told a top Democratic lawmaker last week.

BRADENTON, Fla. - Jefferson County, Ala., commissioners tomorrow will be asked to approve a $950,000 contract to hire Washington-based Book Hill Partners LLC.