Posts tagged ‘municipal bond fraud lawyer’
SEC bulletin regarding municipal bond risks.
The Securities and Exchange Commission today issued an Investor Bulletin to help purchasers of municipal bonds better assess the bonds’ credit risks.
The bulletin provides several factors for investors to consider including the type of the bond, the purpose and nature of the financing, the overall financial condition of the issuer, and the sources of funds to pay both principal and interest.
The bulletin also urges investors to undertake their own independent review of municipal bonds’ credit risk and not rely solely on a credit rating or a short-hand label such as “general obligation” or “revenue” bond when deciding whether to purchase a municipal bond.
Once considered an extremely safe investment, the risk of default for municipal bonds is as extreme now as ever. Clearly the SEC bulletin is meant to educate the public of the default risks of municipal bonds with the hopes that investors will be better educated before investing in these investments.
For the full text of the SEC’s municipal bond investor bulletin visit http://sec.gov/news/digest/2012/dig122612.htm.
If you suffered losses investing in municipal bonds, the securities attorneys of The White Law Group may be able to help. For a free consultation call 312/238-9650.
For more information on The White Law Group visit http://www.whitesecuritieslaw.com.
Municipal Bonds – the next big wave of litigation?
It used to be that municipal bonds were one of the safest investments that a financial advisor could recommend to a client, and were often utilized by retired investors looking for a safe way to generate income in retirement. Unfortunately, the heyday of muni bonds appears over and any financial advisor not adequately disclosing the risks of municipal bonds is doing so negligently. There is simply too much information out there in the media and too many negative warning signs for a financial advisor to continue to tout these investments as super low risk.
One significant factor that impacts whether these investments will perform in the future is the status of the tax-exempt status of municipal bonds. This status is up in the air as Congress wrestles with the fiscal cliff.
Any changes to the tax status of the bonds could send notoriously fickle municipal bond fund investors fleeing for the exits, and as with any outflow of capital, this could cause an enormous decline in municipal bond values.
As has been reported in numerous other places, municipal bond investors have shown already that they’re susceptible to factors that have nothing to do with the underlying fundamentals of the market. In late 2010, for example, a massive sell-off in the municipal bond market was triggered by analyst Meredith Whitney who predicted a near-apocalyptic scenario for the asset class. Although the raft of defaults predicted by Ms. Whitney has failed to materialize, many municipal bonds have defaulted and the underlying concern for the sector still exists.
Another risk of this sector is liquidity risk. Because of the illiquid nature of municipal bonds, the performance of municipal bonds is largely tied to flows into and out of the funds. That illiquidity could get even worse if the tax exemption is threatened, as it would make the narrow investor base even narrower and retail customers could be stuck in these investments similar to way investors were stuck in auction rate securities in 2008.
Although the form is uncertain, most analysts agree that some kind of a change to the tax exemption seems fairly likely, given the fiscal challenges the government faces.
For these reasons it appears that municipal bonds could be facing a fiscal cliff of their own, and if it occurs, financial advisors that glossed over the risks of such an event could be left holding the bag.
The foregoing information has been provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group visit http://www.whitesecuritieslaw.com. For a free consultation with a securities attorney, please call the firm’s Chicago office at 312/238-9650.
It is being reported that the U.S. Securities and Exchange Commission (the SEC) recently approved regulations that will prevent banks from keeping secret the yields on certain state and local government bonds during the first trading day.
According to these reports, the SEC approved rules that will require underwriters to disclose yields on bonds that aren’t immediately offered for resale to investors. The change will require more rapid dissemination of information that previously may not have been available to the public until the end of the trading day.
The rules are aimed at injecting more transparency into the $3.7 trillion municipal bond market, which is used by states, cities and school districts to finance public projects. Clearly, additional transparency is a benefit to retail investors, many of whom are retirees.
The foregoing information has been provided by The White Law Group, a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida. For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
SEC Issues Report on Improving Regulation of Municipal Securities Market
The Securities and Exchange Commission recently issued a comprehensive report with recommendations to help improve the structure of the $3.7 trillion municipal securities market and enhance the disclosures provided to investors.
This is welcome news with the increasing frequency of municipal bankruptcies and the slow realization by investors that municipal bond market is not the risk-free bastion that it once was.
The report is the culmination of an extensive review of the municipal securities market that was initiated by SEC Chairman Mary L. Schapiro in mid-2010 and led by SEC Commissioner Elisse B. Walter. The recommendations address concerns raised by market participants and others in public field hearings and meetings
State and local governments issue municipal securities to finance a wide variety of projects that are critical to building and maintaining the nation’s infrastructure.
At the start of 2012, there were more than one million different municipal bonds outstanding totaling $3.7 trillion, with 75 percent held by individual “retail” investors.
Despite its size and importance, the municipal securities market has not been subject to the same level of regulation as other sectors of the U.S. capital markets due to broad exemptions under federal securities laws for municipal securities.
Potential legislative changes recommended in the report to help improve disclosures and practices in the municipal securities market include:
- Eliminating the availability of Securities Act and Exchange Act exemptions for conduit borrowers who are not municipal entities.
- Authorizing the Commission to establish the form and content of financial statements for municipal issuers who issue municipal securities, and to recognize a designated private-sector body as the standard setter for generally accepted for federal securities law purposes.
- Providing a safe harbor from private liability for forward-looking statements of repeat municipal issuers that satisfy certain conditions.
- Permitting the Internal Revenue Service to share information with the SEC that it obtains from returns, audits, and examinations related to municipal securities offerings, particularly in instances of suspected securities fraud.
- Providing a mechanism, through trustees or other entities, to enforce compliance with continuing disclosure agreements and other obligations of municipal issuers to protect municipal securities bondholders.
The SEC already has taken steps to improve municipal securities disclosure within its limited regulatory authority. In May 2010, the Commission adopted amendments to Exchange Act Rule 15c2-12 that were aimed at improving the quality and timeliness of municipal securities disclosure. The changes were intended to help provide investors with enhanced information by further regulating those who underwrite or sell municipal securities. The measures strengthened existing requirements for the scope of securities covered, the nature of the events that issuers must disclose, and the time period in which disclosure must be made. (Press Rel. 2012-147)
The foregoing information, which is publicly available on the SEC’s website, is being provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida. The White Law Group primarily represents investors in FINRA arbitration claims against their brokerage firm.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Recovery of Harrisburg Municipal Bond Losses
Have you suffered investment losses in a Harrisburg, Pennsylvania municipal bond? If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.
Harrisburg’s insolvent capital missed its general-obligation bond payments for the first time as its receiver seeks approval for a plan to sell assets.
According to reports, Harrisburg, carrying a debt load of more than five times its general-fund budget, missed $5.27 million in bond payments due March 15 on $51.5 million of bonds issued in 1997.
The White Law Group is investigating the liability that brokerage firms may have for recommending the Harrisburg municipal bonds to its clients.
Brokerage firms have a duty to perform due diligence on any investment prior to recommending it for sale to its clients. Broker-dealers and financial professionals that sold Harrisburg bonds would need to demonstrate that they performed due diligence on these municipal securities prior to recommending them to their clients. To the extent that the firm’s failed to miss warning signs, they may be liable for any losses that have been incurred.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of a Harrisburg municipal bond, please contact the municipal bond securities attorneys of The White Law Group at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.