Funds News

US SEC seeks mayor testimony in Alabama muni case

WASHINGTON, Dec 17 (Reuters) - The U.S. Securities and Exchange Commission asked a federal judge on Monday to force the mayor of Birmingham, Alabama, to testify in the agency’s fraud investigation into the sale of Jefferson County municipal bonds.

The agency said it filed an action in U.S. District Court in Miami on Monday to require Larry Langford to testify about possible violations of federal securities laws in connection with the offer, purchase or sale of the bonds.

The SEC also filed an action to require William Blount, the chairman of Blount Parrish & Co, an SEC-registered municipal securities dealer, to testify in the case.

Both men appeared before the SEC last week in response to subpoenas from the agency and declined to testify or give a recognized legal privilege that would excuse them from answering the SEC’s questions, the agency said in a statement.

“Langford referred to privileges and a ‘right under the United States Constitution,’ as his reason for not answering questions, but would not clarify what he meant,” the SEC said.

The SEC said it is investigating whether people or entities made false statements or failed to disclose material facts about improper payments made in exchange for municipal securities business.

A spokeswoman for the mayor did not immediately have a comment on the case. Blount’s attorney could not immediately be reached.

The SEC has said the fast-growing municipal bond market is a top priority for the agency and has asked Congress to improve accounting and disclosure in the $2.4 trillion industry.

The SEC is also conducting an investigation into municipal securities offerings by the city of San Diego. It partially settled the case in November 2006, when it sanctioned the city for not disclosing important data about its pension obligations in the sale of the bonds. (Reporting by Karey Wutkowski; Editing by Brian Moss)