May 31 Underwriters and municipal advisers
selling debt in the $3.7 trillion U.S. municipal bond market may
be required to publicly disclose any financial incentives tied
to deal making, regulators said on Thu rsday.
Pointing to scandals such as the one that helped drive
Alabama's Jefferson County into a $4.23 billion bankruptcy, the
Municipal Securities Rulemaking Board said it was seeking
comment on a proposal to require market professionals to publish
deal-related incentives on its EMMMA website.
"In the wake of Jefferson County, Alabama, and other
situations involving undisclosed financial relationships,
concerns have arisen regarding potential conflicts of interest
that can impair the ability of municipal market professionals to
act fairly and objectively," the MSRB said in a news release.
The proposal, if enacted as drafted, would require
underwriters and advisers to disclose payments given or received
in connection with new issues of tax-free debt, including ones
made to attract business.
"This comes at a time when the MSRB is focused on our
expanded mandate under the Dodd-Frank Wall Street Reform and
Consumer Protection Act to protect state and local government
issuers," MSRB Executive Director Lynnette Kelly said in a
Home to Birmingham, Alabama's biggest city, Jefferson County
last November filed the largest U.S. municipal bankruptcy
largely because of massive expenses connected to its county
sewer system and its soured financing.
Dozens of local officials and business leaders were
prosecuted on charges related to corruption and JPMorgan Chase
in 2009 struck a settlement requiring payments of $720
million over an unlawful payment scheme in Jefferson County's