California muni bond group under investigation

SAN FRANCISCO (Reuters) - A California group that lobbies state leaders on municipal bond matters is under investigation by securities industry regulators over issues such as political contributions.

The Financial Industry Regulatory Authority has requested information from members of the California Public Securities Association to determine if the muni industry group violated federal securities laws.

In a letter to the association, the industry-run watchdog seeks information on whether payments by members of the association are allocated to political action committees and political candidates and causes.

Association members said on Tuesday they had received the letter requesting information on their ties to the group, payments to it and its political action committee and other organizations that donate to political campaigns.

The authority's letter accompanies increasing interest on the part of the U.S. Securities and Exchange Commission in municipal debt disclosure issues.

A spokesman for the Financial Industry Regulatory Authority, an industry watchdog rather than a government agency, said he could not comment on the letter, dated January 18 and signed by Principal Counsel Gina M. Petrocelli, according to a copy obtained by Reuters.

The Chairman of the California Public Securities Association was not immediately available for comment. Officials at some of its more than 30 member companies confirmed they had received the authority's letter.

"We don't have any concern about it," said Mary Neale, co-founder of Los Angeles-based Greencoast Capital Partners, noting, however, that the request came as a surprise.

The California Public Securities Association says on its website that it works with state lawmakers to "facilitate municipal issuers' access to the capital markets" and "serves as the focal point for the public finance industry's relationship with California's legislature."

"Additionally, we periodically support voter initiatives that provide funds for important projects of benefit to public education, transportation, local infrastructure, clean water, parks and open space preservation," the website says.

(Reporting by Jim Christie; Editing by Andrew Hay)