Law and regulation

Municipalities are getting themselves into trouble by borrowing to cover operating deficits, Federal Reserve Bank of New York president and chief executive officer William Dudley told attendees at a closed-doors workshop Tuesday.

The Bond Dealers of America is stepping up its educational efforts on regulation and electronic trading as well as trying to increase its connections on Capitol Hill, said new BDA board chairman Steve Genyk.

Two divisions of Morgan Stanley have agreed to be censured and pay $675,000 to settle Financial Industry Regulatory Authority charges that the dealers misrepresented taxable municipal bond interest paid to customers as tax-exempt.

The Securities Industry and Financial Markets Association announced that it has developed model sophisticated municipal market professional, or SMMP, documentation to allow firms to comply with muni rules when dealing with investors who need less regulatory protection.

The municipal advisory business has exploded over the past 30 years, as economic, regulatory, and technological developments have combined to create a bigger business that is increasingly dominated by firms focused mostly on MA services.

The Securities and Exchange Commission’s revised estimates of the burden of complying with its main disclosure rule still inaccurate, the Securities Industry and Financial Markets Association told the commission in a new letter.

A federal appeals court will hear oral arguments May 15 in the case of three convicted bid riggers seeking to have their convictions overturned.

A Republican congressman said Tuesday he is concerned that the Securities and Exchange Commission's approach to municipal market enforcement risks creating an environment where only big players will get a seat at the table.

State revenues from gambling show weakness despite gambling expansion, according to a report from the Nelson A. Rockefeller Institute of Government.

Non-dealer municipal advisors should not be allowed to act as placement agents for an issuance of bonds, the Securities Industry and Financial Markets Association told Securities and Exchange Commission chair Mary Jo White in a recent letter.

The Municipal Securities Rulemaking Board on Thursday requested approval from the Securities and Exchange Commission to expand the post-trade data displayed on EMMA.

Lawmakers are concerned about the Securities and Exchange Commission's extensive use of administrative proceedings to enforce securities laws in the wake of the Dodd-Frank Act, a trend that has not extended to municipal cases.

An expected months-long suspension of sales of state and local government series securities is likely to be most challenging for small issues with short defeasance escrows, market participants said.

Former Miami budget director Michael Boudreaux wants the U.S. Supreme Court to grant him immunity from a Securities and Exchange Commission lawsuit that has attracted a lot of attention from issuer officials and attorneys.

Muni professionals who take a Municipal Securities Rulemaking Board-owned qualifications exam on or after April 1 will pay an increased fee of $150, the MSRB announced this week.

The muni market may learn more about how issuers fared under the Securities and Exchange Commission's Municipalities Continuing Disclosure Cooperation initiative after they respond next month to a survey from the Government Finance Officers Association.

The total amount of outstanding municipal securities and loans in the market rose 0.6% to $3.65 trillion in the fourth quarter of last year, as U.S. bank muni holdings increased 2.5% and mutual fund muni holdings rose to a record high $658 billion.

Lawyers, issuer officials, and others consulted about the fund agreed that the three firms did nothing against the rules when they gave the money to the fund, which is governed by a board independent of the city leadership and which does nothing to politically support Garcetti or any other political interest.

Securities and Exchange Commission member Daniel Gallagher is calling for Congress to mandate that municipal issuers use Government Accounting Standards Board benchmarks, possibly as a condition for the bonds to be tax-exempt.

Many bond lawyers feel that with all municipal rating agencies soon to be beaming live ratings to EMMA, the Securities and Exchange Commission should amend its rules so that issuers no longer have to worry about filing notices of upgrades and downgrades.