Public Finance

Beginning May 1, 2013, many new business conduct regulations adopted by the Commodity Futures Trading Commission (“CFTC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) will begin to take effect.

The post on our securities litigation and compliance blog titled "SEC Steps Up Scrutiny of Municipal Bonds: Recently Filed Enforcement Actions"  surveys recent SEC enforcement actions against municipal bond issuers. 

Last Tuesday, Puerto Rico sold its much-ballyhooed $3.5 billion in non-investment grade general obligation bonds. Two days later, two legislators in Puerto Rico’s Senate filed a bill which, if enacted, would permit insolvency filings by Puerto Rico’s public corporations in Puerto Rico's territorial trial court.

Although Puerto Rico’s much-discussed sub-investment grade general obligation bond issue is not yet being marketed via an official preliminary official statement, it appears that a draft POS has been making the rounds. 

As reported by the Wall Street Journal today and by other sources, the authorizing legislation for Puerto Rico’s much anticipated $3.5 billion non investment grade general obligation issue has become hung up in Puerto Rico’s Senate over language included in the bill passed by the territory's House of Representatives.

After initially putting the brakes on the MSRB’s attempt to use underwriters of Section 529 college savings plans as its data-gathering team, the SEC has pressed the accelerator and approved an amended MSRB Rule G-45.

We previously discussed the Puerto Rico Supreme Court’s decision in the Hernandez case, in which by a 5-4 vote the court upheld the constitutionality under federal and Puerto Rico law of pension reform legislation affecting public sector employees.

As Puerto Rico prepares to access the public markets with a new bond issue, the Wall Street Journal reports that the list of demands from some potential investors include, in addition to a high interest rate and as much security as the issuer can provide, the issuer’s consent to the adjudication in the New York courts of any future disputes involving the applicable bonds.

The Government Development Bank for Puerto Rico (GDB) hosted an unusual public conference call on October 31 to respond to legal questions raised by investors in bonds issued by the Puerto Rico Sales Tax Financing Corporation, better known by its Spanish acronym, COFINA.

A series of alternative proposed Initiative Petitions were filed on August 7th, with the Office of the Attorney General of Massachusetts (the “AGO”) seeking primarily to establish specified limits on operating margins achieved by many Massachusetts hospitals and on the compensation of the CEOs of such hospitals.

This is a reminder that tomorrow, April 10, 2013, is the deadline for parties to certain swap agreements to obtain a CICI identifying number.

The IRS recently issued a private letter ruling, PLR 201310043 (released on March 8, 2013), of interest to Section 529 plans and their program managers. The ruling relates to the tax treatment of incentive contributions to 529 accounts and was issued in response to a ruling request by a financial services complex described as including a bank and broker.

A recent ruling in the American Airlines bankruptcy case enforcing an automatic acceleration upon bankruptcy provision serves as a reminder that the enforceability of so-called ipso facto provisions in debt instruments remains an unsettled, forum-dependent question. 

MSRB Rule G-17 has been interpreted by the MSRB as requiring a broker or dealer (“broker”) to  disclose to its customer, at or prior to the time of trade of a municipal security, all material information about the transaction known by the broker, as well as material information about the security that is reasonably accessible to the market. 

Market commenters have suggested that billions of dollars in municipal bonds may be subject to par redemptions if the much-discussed “28% cap” on the value of certain federal income tax deductions or exclusions is enacted and if the capped items include municipal bond interest.

This is a follow up to our recent blog post discussing then pending Michigan legislation known as the “Local Financial Stability and Choice Act” or Public Act 436 (the “Financial Stability Act”), which will replace Public Act 72 and overhaul Michigan’s emergency manager law.

Detroit’s increasingly distressed financial condition has created a dynamic and rapidly evolving situation where the potential of a Chapter 9 filing appears to be the subject of renewed discussion and legislative attention. 

Since August 2, 2012, investment banking firms retained to act as underwriters on municipal finance transactions have been required to provide written disclosure to issuers concerning the relationship between issuers and underwriters.

Please find today’s special revenue decision in the Jefferson County bankruptcy case.

The IRS is planning on sending out letters (“Letters”) over the next few months to several hundred issuers who have experienced covenant or payment defaults from 2007 to the present.