Law and legal issues

WASHINGTON - Merrill Lynch & Co., Goldman, Sachs & Co., and Deutsche Bank AG will buy back at par as much as $14.5 billion of auction-rate securities and pay $162.5 million of fines under separate agreements in principle reached with New York Attorney General Andrew Cuomo and the North American Securities Administrators Association.

WASHINGTON - Fidelity Investments and Charles Schwab & Co. are suggesting state and federal securities regulators focus their auction-rate securities investigations on the major banks and broker-dealers that underwrote ARS rather than smaller brokerages that had no advance knowledge that the ARS market was going to collapse.

WASHINGTON - Erik Kimball, formerly a shareholder with Akerman Senterfitt in Orlando, in June joined U.S. Bankruptcy Court for the Southern District of Florida for a 14-year term as a judge in the West Palm Beach division.

DALLAS - A third El Paso Independent School District trustee implicated in a wide-ranging federal corruption investigation has abruptly resigned.

WASHINGTON - The Regional Bond Dealers Association is pushing state and federal regulators to force the major banks and broker-dealers that underwrote auction-rate securities to provide relief to all investors who purchased ARS, not just the investors that were their customers.

SAN FRANCISCO - A long-running lawsuit filed by a spurned oil-drilling company has the potential to force a Southern California beach city into bankruptcy or take on debt to settle the case, though Hermosa Beach officials hope state lawmakers will pass a bill that could eliminate much of their liability.

WASHINGTON - Ronald Stack, managing director and head of public finance at Lehman Brothers, has been elected chairman of the Municipal Securities Rulemaking Board for a one-year term beginning Oct. 1, the board announced today.

BRADENTON, Fla. - Alabama's pension chief advised Jefferson County commissioners Friday to authorize their attorney to prepare to file for Chapter 9 municipal bankruptcy and use the threat of an actual filing to force the county's creditors into "serious negotiations" to resolve a sewer-debt crisis on terms more favorable for taxpayers.

BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday voted 3 to 2 to ask local voters Nov. 4 how they want the county to solve its $3.2 billion sewer debt crisis, including whether or not the county should seek municipal bankruptcy protection from creditors.

WASHINGTON - In the first legal action of its kind, New Hampshire's top securities regulator has filed administrative proceedings against UBS Securities LLC for unethically misrepresenting auction-rate securities it underwrote and remarketed for the state's nonprofit student loan lender.

Widespread conversions from auction-rate securities to variable-rate demand obligations featuring liquidity facilities may result in activities that violate federal laws against bank tying as well as prohibitions against the underpricing of credit products, the Municipal Securities Rulemaking Board said in a notice to broker-dealers yesterday.

WASHINGTON - JPMorgan Chase & Co. and Morgan Stanley yesterday became the latest firms to reach auction-rate securities settlements with New York State Attorney General Andrew Cuomo and other states, agreeing yesterday to buy back at par a total of $7.5 billion of the illiquid securities from retail investors and pay fines of $60 million.

WASHINGTON - The Nebraska public power executives and municipal power pool who were enjoined from managing a $529 million bond-funded power project and ordered to pay more than $3 million in damages to a competing agency have submitted motions for a new trial, arguing they were not treated fairly in the first one.

WASHINGTON - The Securities and Exchange Commission enforcement staff has notified Wachovia Bank NA that they may recommend the SEC file charges against it as a result of an investigation of alleged anti-competitive bidding practices in municipal derivatives and investment products.

WASHINGTON - New York Attorney General Andrew Cuomo yesterday expanded his investigation of auction-rate securities to include JPMorgan Chase & Co., Morgan Stanley, and Wachovia Securities LLC, asking the firms to negotiate agreements to provide relief for investors, as Citigroup Global Markets Inc. and UBS AG did last week.

WASHINGTON - UBS AG, the second-largest auction-rate securities dealer, agreed to purchase or provide liquidity for $22.1 billion of ARS and pay $150 million in fines, in a settlement with state and federal regulators.

The Securities Industry and Financial Markets Association is challenging a key claim of the Securities and Exchange Commission's suit against three Alabama individuals by arguing that the SEC does not have oversight of interest rate swaps based on its municipal swap index, claiming it is an index of interest rates, not securities.

The Securities and Exchange Commission has begun administrative proceedings against Kent Nelson, a former San Diego-based investment adviser who pleaded guilty last year to a federal charge of mail fraud in connection with kickbacks he sent to two New Mexico state treasurers.

BRADENTON, Fla. - After Jefferson County commissioners on Tuesday approved a restructuring plan for its troubled $3.2 billion of sewer debt, Alabama Gov. Bob Riley said he would not call a special session of the Legislature unless the plan has solid backing from lawmakers first.

BRADENTON, Fla.- The Jefferson County Commission yesterday approved a resolution asking Alabama Gov. Bob Riley to call a special session of the Legislature to consider the county's sewer debt restructuring plan.