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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| 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
|
3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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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)
|
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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SEC Eyes Muni Disclosure, Bond Pricing |
REUTERS - Oct. 21, 2010
The dire fiscal condition of U.S. states and local governments is worrying federal regulators who want to ensure that investors who buy bonds are getting the proper information about potential risks.
"Municipal and state governments need to disclose what the risks are so that investors can go into those investments with their eyes wide open," said Elaine Greenberg, a top U.S. Securities and Exchange Commission enforcement official.
On both the local and state fronts, the recession that started in 2007 has created severe economic stress.
Adding to the gloom, a recent survey by a major group of city officials found that the housing market collapse is only now denting property tax revenue — a key source of funding for many cities. That means the effects of the recession could persist at the local level through 2012.
The SEC is trying to ensure investors understand the risks of buying bonds that those states and local governments sell into a market with total outstanding debt of $2.8 trillion.
The agency has 30 enforcement agents to police the municipal bond market. Greenberg heads that unit, which has brought just one major case so far.
But the suit against the state of New Jersey fulfilled Greenberg's mandate to mount high-profile cases that can set legal precedent and direction for enforcement.
In August the commission settled with New Jersey over flawed bond disclosures, saying the state had not adequately informed investors of the costs of its pensions.
Greenberg said the settlement was a warning to all other public debt issuers.
"We're sending the message to state and local governments that to the extent they need to change or modify their disclosure practices they should be doing so," Greenberg said in an interview.
Other sources say the SEC is now looking into Bell, the Los Angeles suburb rocked by a corruption scandal in which city leaders alleged to have used public money to pad their bank accounts.
While Greenberg thinks it is paramount that cities and states make any fiscal hardships plain to those buying their debt — that "problems be adequately disclosed when they're going to raise money from the public" — she said the agency is also looking into the pricing of those bonds.
"There's no exchange for municipal securities. Some of them are very thinly traded, which can give rise to certain fraudulent activities when these securities are priced or valued. We have a concern in that area," said Greenberg, a 20-year veteran of the SEC.
Build America Bonds of Great Interest
The $814 billion U.S. economic stimulus plan passed last year created a new form of debt in taxable Build America Bonds.
Because they pay issuers a steep federal rebate equal to 35 percent of interest costs they have caught on like wildfire, with more than $136 billion sold since the first one was issued in April 2009.
BABs accounted for nearly a quarter of all the debt sold by state and local governments in 2010 so far.
With the creation of a new security has come new problems and complications. For example, the subsidies paid to issuers are treated like tax rebates to individuals. If an issuer owes the federal government money, the sum is deducted from the payment before it is sent.
So far, the SEC has not brought any enforcement action against a BABs issuer or an underwriter or trader. But it is working with the Treasury Department and Internal Revenue Service to identify potential problems, specifically how the bonds were priced and when they were offered to investors.
"Disclosures relating to the tax treatment of municipal securities, whether you are dealing with tax-exempt bonds or taxable BABs, are of great interest to the SEC," Greenberg said.
Copyright 2010 Thomson Reuters.
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