Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, October 19, 1993 TAG: 9310190069
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: WASHINGTON LENGTH: Medium
Eighteen bond houses and one Wall Street law firm endorsed an initiative barring brokerage firms, employee political action committees, bond industry consultants, municipal finance professionals, their supervisors and senior mangement from making or soliciting political contributions at the state and local levels. Lesser employees could give money as individuals, however.
The voluntary initiative, announced by Arthur Levitt, chairman of the Securities and Exchange Commission, covers firms that conduct about three-quarters of the nation's municipal bond business. Its adoption comes just a few weeks after the Public Securities Association, the bond industry's lobbying group, asked member firms not to make any more political contributions to state and local officials until regulators could adopt a rule that provides clear guidance on the issue.
Meanwhile, an industry regulatory group - the Municipal Securities Rulemaking Board - is expected to meet next month to finalize a mandatory rule that would require detailed disclosure of campaign donations and would prohibit dealers from making political contributions for the purpose of getting or keeping municipal bond business.
Wall Street executives have decried the practice. However, industry officials say that if they wanted to compete, they had to make political donations because they feared that competitors who continued giving would have an inside track on the municipal bond business.
It is legal for bond firms to make political campaign donations, and supporters of campaign giving say restrictions on political donations could violate the First Amendment rights of dealers.
But Levitt said Monday that "perceptions of inappropriate political contributions can seriously threaten the integrity of the municipal securities market" and "erode public confidence in a market that depends heavily on public trust."
Efforts to curtail political donations by bond dealers mushroomed earlier this year when federal investigators began looking into whether kickbacks were involved in the underwriting of New Jersey Turnpike bonds. Alleged inappropriate campaign donations also surfaced in Boston and Kentucky this year.
The movement to curb campaign contributions by bond firms could significantly affect future election fund raising across the nation, because the Wall Street investment community has become a big source of political money.
Keywords:
POLITICS
by CNB