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Category Archives: Municipal Bonds

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Puerto Rico and Its Bondholders

Posted in Credit Risk, Hedge Fund, Investment Management, Litigation, Municipal Bonds, Susan Mangiero
After a round of holiday hellos during dinner with a group of friends, the conversation turned to Puerto Rico and its financial distress. One gentleman at the table has a lot of his 401(k) account invested in municipal bonds, including a hefty allocation to Puerto Rico. Naturally he is nervously watching events and hoping for the best. From his… Continue Reading

Good Players Pay For Other People’s Bad Investment Compliance

Posted in Compliance, Financial Crisis, Governance, Investment Management, Municipal Bonds, Pension, Regulation
Much to my chagrin, I am told that it is my responsibility to pay for the removal of my neighbor’s tree after it fell in my backyard. Never mind that the tree is old and was left untended for many years until a bad storm destroyed its ability to stand. Ignore the fact that I… Continue Reading

Using Leverage to Chase Returns

Posted in Derivatives, Disclosure and Transparency, Financial Reporting, Investment Management, Leverage, Liquidity, Litigation, Municipal Bonds, Pension, Regulation, Risk Management
It is no secret that pension economics is becoming the topic du jour in public finance land. On August 11, 2014, the U.S. Securities and Exchange Commission (“SEC”) made known its allegations of securities fraud against the State of Kansas. According to the official cease-and-desist order, information made available to municipal bond investors “failed to… Continue Reading

Muni Bonds, Pensions and Financial Disclosures

Posted in Compliance, Derivatives, Disclosure and Transparency, Financial Reporting, Hedge Fund, Liquidity, Litigation, Municipal Bonds, Pension, Regulation
I had the pleasure of co-presenting on February 19 with senior attorney Elaine Greenberg as part of an educational briefing for the Practising Law Institute. A partner with Orrick, Herrington & Sutcliffe LLP and the former chief of the Municipal Securities and Public Pensions Enforcement Unit, part of the U.S. Securities and Exchange Commission (“SEC”), Attorney… Continue Reading

New Report Examines State of Public Section Defined Benefit Plans

Posted in Disclosure and Transparency, Municipal Bonds, Pension
Thank you to Pullman & Comley senior attorney, George J. Kasper, for sharing a “hot off the press” report about employee benefit plans that are offered by state and local governments. Entitled “The Blinken Report: Strengthening the Security of Public Sector Defined Benefit Plans“(The Nelson A. Rockefeller Institute of Government, State University of New York,… Continue Reading

Muni Bonds, Pensions and Financial Disclosures: Compliance, Litigation and Regulatory Trends

Posted in Compliance, Disclosure and Transparency, Litigation, Municipal Bonds, Regulation
Mark your calendars to attend “Muni Bonds, Pensions and Financial Disclosures: Compliance, Litigation and Regulatory Trends.” At a time when unfunded pension and health care obligations are accelerating the budgetary crisis for some municipalities, experts fear that current problems are the tip of the iceberg. A new focus on accounting rules, the quality of disclosure to… Continue Reading

Big News in Muni Bond Land About Public Pensions

Posted in Disclosure and Transparency, Financial Crisis, Municipal Bonds, Mutual Funds, Pension, Regulation
No doubt yesterday’s decree that pensions can be slashed as part of a bankruptcy filing for the City of Detroit have left some persons gasping for air, wringing their hands and generally caught by surprise that contractual retirement obligations may no longer be sacrosanct. As the result of a historic decision to possibly curtail pension benefits,… Continue Reading

Hedge Funds Invest In Muni Bonds

Posted in Hedge Fund, Municipal Bonds
The nearly $4 trillion muni bond market could be in for some big changes if hedge funds have their way. Traditionally, a retail-focused market, hedgies are showing keen interest in fixed income securities that are issued by public entities such as states and cities. Notwithstanding the negative headlines about bankruptcy filings in Detroit and elsewhere,… Continue Reading

Fitch Downgrades Chicago, Citing Large Unfunded Pension Obligations as a Factor

Posted in Municipal Bonds, Pension
I like Chicago. When I worked there for what was then known as the First National Bank of Chicago, I lived near Lincoln Park. I remember taking long walks as a way to explore the Windy City.  Whenever I return now for business, I do so with pleasant anticipation. Unfortunately, local taxpayers may be less upbeat, now that Fitch… Continue Reading

Muni Bond Public Pension Disclosures – Still High Priority For Regulators

Posted in Compliance, Derivatives, Disclosure and Transparency, FINRA, Litigation, Municipal Bonds, Mutual Funds, Pension, Regulation
According to a November 8, 2013 press release, the U.S. Securities and Exchange Commission (“SEC”) has appointed LeeAnn Ghazil Gaunt as head of the Municipal Securities and Public Pensions Unit of its Enforcement Division. She is credited for overseeing pay-to-play actions and investigations that range from inappropriate hedge accounting disclosures and market timing. No doubt… Continue Reading

SEC Charges That Muni Bond Investers Were Defrauded

Posted in Disclosure and Transparency, Financial Reporting, Fraud, Municipal Bonds
  According to its July 29, 2013 SEC News Digest, the U.S. Securities and Exchange Commission (“SEC”) charged the municipal bond underwriter, City Securities Corporation (“City Securities”), and a debt securities issuer, Indiana-based West Clark Community Schools (“West Clark”), with “falsely stating to bond investors that the school district had been properly providing annual financial… Continue Reading

SEC Crackdown on Municipal Bond Disclosures

Posted in Disclosure and Transparency, Municipal Bonds, Regulation
The issue of municipal bond disclosures (or the lack thereof) has been increasingly attracting attention from regulators. A few days ago, Dian ElBoghdady with the Washington Post wrote that more enforcement is on its way. “SEC cracks down on disclosure in municipal bond sales” (June 28, 2013), includes a tally of cities and states that… Continue Reading

Municipality Finance: Bankruptcies, LIBOR and Pension Plans

Posted in Compliance, Litigation, Municipal Bonds
  According to Governing.com, Chapter 9 filings by municipalities are likely to increase. See “Mapping Municipal Bankruptcies” by Mike Maciag (July 25, 2012) for a visual of cities, towns, counties, utility authorities and other municipal organizations that have waved the distress flag. According to Moody’s Investors Services, California may lose some of its golden luster… Continue Reading

Municipal Securities Rulemaking Board and Pension Disclosure

Posted in Disclosure and Transparency, Municipal Bonds
Into the maelstrom of municipal bond disclosure investigations comes a request by the Municipal Securities Rulemaking Board (“MSRB”) for comments about public pension plan IOUs. Specifically, they seek information about the funding status of defined benefit plan arrangements. According to “MSRB Looking at Pension Disclosure” by Andrew Ackerman (Bond Buyer, January 31, 2011), there is… Continue Reading

Muni Bond Woes and Headline Risk

Posted in Disclosure and Transparency, Litigation, Municipal Bonds, Pension
If The Bond Buyer journalist Dan Seymour is correct, litigators may soon be even busier. According to “Headline Risk Drains Muni Bond Funds” (Money Management Executive, January 31, 2011), the week ending on January 19, 2011 saw investors withdraw an unprecedented $4 billion from mutual funds that invest in bonds issued by municipalities. In context,… Continue Reading