Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 7, 1994 TAG: 9404070318
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The new rules approved by the Securities and Exchange Commission are among the strongest reforms ever to reach the $1.2 trillion muni bond market, which raises money for city sewer systems, schools and a host of other local government services.
The move comes amid investigations that major Wall Street firms may have engaged in political influence peddling and conflicts of interest to attract and retain the lucrative muni bond business.
The SEC rule, which passed unanimously, generally prevents muni bond dealers from doing business with local jurisdictions for two years after they make a political contribution to a local officeholder or candidate.
Federal candidates, special-interest political action committees and others who cannot influence awards of muni bond contracts are exempt from the rule.
``The goal of these proposals is to promote investor confidence in the integrity of the municipal securities market,'' said SEC Chairman Arthur Levitt Jr.
Levitt referred to the thousands of consumers who hold about 70 percent of all municipal bonds, either directly or indirectly through funds. Local taxpayers also stand to benefit if the rule reduces political influence in the market, said SEC Commissioner J. Carter Beese Jr.
``Political donations have been just another cost of doing business, just like salaries, [and] printing costs,'' Beese said. That cost is passed on to the taxpayer through higher costs of underwriting the bonds, he added.
by CNB