| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Commentary: The SEC Sets its Sights on Muni Bonds |
Traders Magazine Online News - October 5, 2010 - by Scott M. Dubowsky; The Nelson Law Firm, LLC
Until recently, the municipal bond market received relatively little attention from the prying eyes of regulators. Municipal bonds were thought of as the "Toyotas" of investment products: mundane but reliable. Today, like Toyotas, the safety and reliability of muni bonds are being called into question. The SEC's discovery of fraud and corruption in muni bond offerings, including its recent landmark fraud case against the State of New Jersey, appears to have been a wake-up call leading to a range of long-overdue regulatory responses.
Last month, New Jersey earned the distinction of being the first state in the union ever to be charged by the SEC for violations of the federal securities laws. According to the SEC, New Jersey offered and sold more than $26 billion of municipal bonds between August, 2001 and April, 2007. The SEC claims that New Jersey's offering documents were misleading and failed to disclose that the Teachers' Pension and Annuity Fund and the Public Employees' Retirement System were not being adequately funded, which presented a false picture of the state's financial health. Robert Khuzami, Director of the SEC's Division of Enforcement noted that New Jersey "didn't give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation."
The SEC's fraud charges against New Jersey appear to be the opening salvo in an outright war against corruption in the muni bond market. The muni bond market is immense in size and importance. States, cities, counties and other governmental entities issue muni bonds to finance basic necessities such as public transportation, education and healthcare. Investor appetite for muni bonds seems limitless. In 1945, there was less than $20 billion of municipal debt outstanding. Today, there are about $2.8 trillion of municipal bonds outstanding, and more than $400 billion of new bonds were issued last year. Moreover, muni bonds are a favorite of individual, retail investors, who hold about two-thirds of the currently outstanding bonds.
The SEC's concerns are not limited to New Jersey's offerings, but extend to the integrity of the muni bond market in general. In a speech by SEC Commissioner Elisse Walter in May, she noted that the municipal securities market "keeps me up at night." She went on to decry "the relative lack of attention being given to this market, even though it is enormous and operates with increasing participation by retail investors."
Walter seems to have prodded the SEC into action. In addition to the New Jersey case, the SEC announced several new regulatory initiatives focusing on fraud, including establishing a specialized task force and proposing rule changes intended to improve the quality and timeliness of municipal securities disclosure.
The new specialized task force, the Municipal Securities and Public Pension Unit, will focus on misconduct in the municipal securities market, including offering and disclosure fraud; tax or arbitrage-driven fraud; pay-to-play and public corruption violations; and valuation and pricing fraud. The SEC believes that this specialized unit will allow it to file cases with "strike-force speed" and, according to Elaine Greenberg, chief of the new unit, the stepped up enforcement efforts will "send a resounding message about particular conduct--cases that will have an impact on the behavior of market participants."
The SEC also is focusing on improving regulations governing this market. Despite its significance, the municipal securities market currently is subject to limited regulatory oversight. Although muni bond issuers are subject to the anti-fraud provisions of federal securities laws, municipal securities are exempt from registration requirements--and the related reporting requirements--of the federal securities laws. Rule 15c2-12 under the Exchange Act, which provides the exemption, allows brokers and dealers to purchase and sell municipal securities if they reasonably believe that the state or local governments issuing the securities have agreed to make certain disclosures, including annual financial statements and notices of events such as payment defaults, rating changes and prepayments. These limited disclosures do not provide anything approaching the detailed reporting required of registered public companies.
For the complete article visit Tradersmagazine.com
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