Law and regulation

The Securities and Exchange Commission is expected to propose Congress give it authority to set primary and secondary market disclosure standards for municipal issuers.

Federal regulators do not support wholesale removal of the Tower Amendment or exemptions from federal securities laws for municipal securities, the General Accountability Office said in a report issued Thursday.

The Securities and Exchange Commission is preparing to issue a report, as soon as Thursday, proposing legislative and regulatory changes that would improve disclosure and price transparency in the $3.7 trillion municipal bond market.

Both the Municipal Securities Rulemaking Board and the Securities Industry and Financial Markets Association on Wednesday released guidance to help underwriters comply with the MSRB's interpretative release on its Rule G-17, which details their disclosure and other fair-dealing obligations to state and local governments issuing municipal bonds.

The House Financial Services Committee's capital markets panel on Friday will hear testimony from nine witnesses representing dealers, state and local governments, and nonprofit organizations at a hearing on the Dodd-Frank Act's impact on the municipal market.

The Financial Industry Regulatory Authority has ordered five firms to pay $117,425 in fines and restitution to customers for violation of municipal securities trade, pricing and supervisory rules.

A regulator will allow bond insurer MBIA Inc. to make a payment on surplus notes issued in 2008, the company said.

A group of Senate Democrats is urging the U.S. Department of Justice and federal banking and securities regulators to investigate allegations that domestic and foreign banks manipulated the London Interbank Offered Rate, or Libor, which is used as a benchmark in municipal bond-related swaps and other financial products.

Municipal market participants are praising rules finalized by the Commodity Futures Trading Commission that except most state and local governments from having to clear interest rate swaps through a derivatives clearing organization.

Lawyers for former UBS Financial Services Inc. bankers Peter Ghavami, Gary Heinz and Michael Welty requested permission from the court to present evidence on municipal bond transactions other than 38 specific deals highlighted by prosecutors.

Senate and House committees are looking into allegations that banks manipulated Libor, the London Interbank Offered Rate that is used by financial institutions to set interest rates for financial products, including interest rate swaps used by municipal bond issuers to hedge variable rate debt.

Lawmakers and financial market participants sparred over the economic and business impact of the Dodd-Frank Bill and the so-called Volcker Rule, as well as fallout from potential new money market rules.

The Senate Banking Committee is looking into the allegations that banks manipulated Libor, the London Interbank Offered Rate that is used by financial institutions to set interest rates for financial products, including interest rate swaps entered into by municipal bond issuers.

An independent investment banker from Arizona is seeking a U.S. patent for a new tax credit structure being modeled as an alternative to traditional bond insurance.

A House Financial Services subcommittee will hold a hearing July 20 to discuss a bill that would eliminate the fiduciary duty imposed on municipal advisors by the Dodd-Frank Act and limit the kinds of firms that would be regulated as municipal advisors.

Bond Dealers of America released a guide Thursday designed to help the group's members comply with recently-approved guidance from the Municipal Securities Rulemaking Board regarding what underwriters must disclose to muni bond issuers.

Malcolm P. Northam, director of fixed income securities at the Financial Industry Regulatory Authority, is planning to retire from the self-regulatory agency at the end of the year but hopes to stay active in bond market.

The Municipal Securities Rulemaking Board is releasing draft rule changes that would prohibit municipal securities dealers from consenting to amendments in bond authorizing documents, except in very limited circumstances.