| 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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Underwriters May Be Banned From Advising on Municipal Bonds, MSRB Says |
Bloomberg - Oct. 25, 2010 - By William Selway
Banks may be banned from advising public officials on U.S. state and local bond deals they underwrite to prevent the firms from exploiting the dual role at taxpayers’ expense.
The Municipal Securities Rulemaking Board, which crafts regulations for the $2.8 trillion municipal bond market, said today it is moving to prevent companies from holding both roles. Last week, the board also agreed that advisers should be covered by rules barring securities dealers from deceptive, dishonest or unfair practices.
State and local government officials hire advisers to help them borrow funds most cheaply. Regulations now allow companies to advise on deals they underwrite, a situation U.S. Securities and Exchange Commission Chairman Mary Schapiro said should stop.
“The change will eliminate what could be perceived as conflict of interest for dealers, and I stress the words ‘could be perceived,’” Michael Bartolotta, MRSB chairman and vice chairman of First Southwest Co. in Dallas, an underwriting and advisory company, told reporters today in a conference call.
In Whose Interest?
The changes would apply to bond issues sold at competitive auctions among banks as well as in so-called negotiated sales. In those deals, an underwriter is selected to set interest rates and line up buyers for the securities in return for an agreed- upon fee. Unlike advisers, underwriters have no requirement to act in their clients’ best interests, and they can set bond interest rates higher to make them easier to resell to investors.
Typically, financial advisers monitor an underwriter’s work in negotiated sales or oversee the auction of the securities. Under current rules, an adviser can persuade a borrower to hire it to underwrite the securities, tailor an auction so that it would be the winning bidder, or add derivatives that would provide higher fees but might not be in the borrower’s best interest.
The MSRB’s current regulation, known as G-23, has allowed a bank to be an adviser and underwriter on the same transaction, provided it resigns as adviser before the securities are offered, and that it discloses the conflict of interest to its client.
Board Remade
The decision to ask the SEC for approval to stop that practice, which the MSRB previously said it was considering, was made last week, when the board held its first meeting since the Dodd-Frank financial overhaul took effect. That law required the MSRB to recast its board so that a majority isn’t composed of representatives of businesses that it regulates, and empowered the board to write rules for advisers, which haven’t been subject to regulation.
The proposed ban would affect companies including Piper Jaffray Cos. and First Southwest that arrange securities sales and offer financial advice.
First Southwest has been both financial adviser and underwriter on only a small share of transactions, typically on behalf of its smaller clients, Hill Feinberg, chief executive officer, said in a telephone interview. The company has underwritten negotiated deals on which it advised fewer than two dozen times out of nearly 2,000 transactions, he said. The average size of the issues was about $5.5 million, Feinberg said.
For the complete article visit Bloomberg.com
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