Washington

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.