TreatiseTreatise

The Securities Law of Public Finance (3rd Edition)

 by Robert A Fippinger
 
 Copyright: 2011-2016
 Last Updated: August 2016

 Product Details >> 

Product Details

  • ISBN Number: 9781402416422
  • Page Count: 2092
  • Number of Volumes: 2
  •  

Written by one of the most respected figures in the field, author and practitioner Robert A. Fippinger, The Securities Law of Public Finance covers every vital area, from finance structuring to securities distribution to the many regulatory changes made in response to the economic downturn. It takes you through each aspect of the regulatory framework controlling the issuance and trading of municipal securities, with special attention to disclosure and fraud issues, including the sovereign immunity defense.

Cited by the SEC for its excellence in illuminating legal issues, The Securities Law of Public Finance clarifies and analyzes the law to give you the smart, steady guidance you need to comply more confidently with registration, disclosure, due diligence, fiduciary, and contractual requirements—and avoid costly legal actions. Included are primary sources, flowcharts, and summary charts that help speed compliance with the rules. Understand:

  • The differences in the regulatory requirements between public finance and corporate finance
  • What are “exempt transactions” and “separate securities”
  • The many kinds of entities that may issue municipal securities
  • The timeline and regulatory requirements for new issue distributions in public finance
  • Asset-backed municipal securities and the use of derivative products
  • Public finance disclosure hot topics and due diligence procedures
  • The regulation of municipal securities broker-dealers, municipal advisors, and investment advisors
  • The structure of the municipal securities marketplace
  • SEC enforcement activity
  • Fraud concepts and sovereign immunity issues in the public securities arena
  Table of Contents
Chapter 1: Distinguishing the Securities Law of Public Finance from the Securities Law of Corporate Finance
  • § 1:1 : The Diversity of Municipal Securities1-3
  • § 1:2 : Distinctions Between Municipal Securities and Corporate Securities1-7
    • § 1:2.1 : Debt/Equity and Public/Private Conceptual Distinctions1-7
    • § 1:2.2 : Practical Distinctions Under Federal Tax Laws and Federal Securities Law1-10
    • § 1:2.3 : Illustrations of the Importance of Constitutional Law to Public Finance1-12
      • [A] : Whether the Public Financing of a Professional Sports Stadium Is a Valid Public Purpose1-14
      • [B] : Whether the Public Financing of a Sectarian School Violates State and Federal Establishment of Religion Clauses1-17
    • § 1:2.4 : The Public Financing of Nonprofit Corporations in a Three-Sector Economy1-21
      • [A] : Federal Income Tax Exemption for Nonprofit Corporations1-24
      • [B] : Tax-Exempt Financing of Nonprofit Corporations1-26
      • [C] : 1933 Act Exemption for Securities Issued by Nonprofit Corporations1-28
  • § 1:3 : Municipal Securities and Government Securities1-29
  • § 1:4 : The Issuers of Municipal Securities1-33
    • § 1:4.1 : States and Agencies of States1-34
    • § 1:4.2 : Municipal Corporations and Quasi-Public Corporations1-36
      • [A] : The Public/Private Distinction1-37
      • [B] : Quasi-Public Corporations1-38
    • § 1:4.3 : Special Purpose Districts1-39
    • § 1:4.4 : Public Authorities1-40
    • § 1:4.5 : Joint Powers Agencies and Interstate Compacts1-42
    • § 1:4.6 : Indian Tribal Governments1-45
  • § 1:5 : Illustrations of the Public Financing of Private Activity1-47
    • § 1:5.1 : Government-Owned Hotels, Privately Operated1-47
    • § 1:5.2 : Public Financing of Sports Stadiums for Professional Sports Teams1-51
    • § 1:5.3 : Nonprofit Museums and Performing Arts Centers1-53
    • § 1:5.4 : Nonprofit Hospital and University Affiliations with For-Profit Business1-55
    • § 1:5.5 : Is an Airport Public or Private?1-58
    • § 1:5.6 : Public-Private Partnerships1-64
  • § 1:6 : Public and Private Sources of Security1-66
    • § 1:6.1 : General Obligation Bonds and Notes1-66
    • § 1:6.2 : Revenue Bonds1-69
      • [A] : Revenue Bonds and Project Finance1-70
      • [B] : Revenue Bonds and Structured Finance1-71
      • [C] : Revenue Bonds Compared with General Obligation Bonds1-72
    • § 1:6.3 : Certificates of Participation1-75
    • § 1:6.4 : Derivative Products1-76
    • § 1:6.5 : State Law Protection for Holders of Municipal Securities1-77
      • [A] : Is There a Fiduciary Duty of Issuers Owed to Debtholders?1-77
      • [B] : State Securities Law1-83
      • [C] : Laws Governing Issuers1-83
  • § 1:7 : A Brief Overview of the Securities Law of Public Finance1-84
    • § 1:7.1 : The Emphasis on Regulating Underwriters and Broker-Dealers1-86
    • § 1:7.2 : The Disclosure Obligation on Issuers of Municipal Securities1-88
    • § 1:7.3 : The Importance of Enforcement1-89
    • § 1:7.4 : Determining Whether the Municipal or Corporate Regulatory System Applies1-91
      • [A] : Focus on the Issuer and the Security1-91
      • [B] : The Boundaries of the Definition of “Municipal Security”1-93
      • [C] : Public-Private Partnership Illustrations1-100
    • Figure 1-1 : Public-Private DBFO Partnership1-100
    • Figure 1-2 : Public-Private DBO Partnership1-101
      • [D] : Tax-Exempt Securities That Are Not Municipal Securities1-101
    • § 1:7.5 : Self-Regulation; the MSRB1-103
    • § 1:7.6 : The Dodd-Frank Act1-104
    • § 1:7.7 : SEC Power to Regulate Governance Standards for Issuers of Municipal Securities1-105
      • [A] : Private Company Background1-105
      • [B] : Effect of Private Company Corporate Governance Rules on Issuers of Municipal Securities1-107
      • [C] : Effect of Enforcement Actions against Municipal Issuers1-107
      • [D] : Effect of the SEC’s MCDC Initiative on Municipal Governance1-110
    • § 1:7.8 : The Regulatory Implications of an Opaque Trading Market1-112
    • § 1:7.9 : The SEC’s Forward Agenda for the Regulation of the Municipal Securities Market1-115
      • [A] : Disclosure Practices1-115
      • [B] : Market Structure1-116
Chapter 2: 1933 Act Issues in Public Finance
  • § 2:1 : The Elements of a Section 3(a)(2) Registration Exemption for States, Political Subdivisions, and Instrumentalities2-4
    • § 2:1.1 : Distinctions Between Securities Law and Tax Law Analysis of Political Subdivisions and Instrumentalities; Legislative Intent2-6
      • [A] : 1933 Act Definition of Political Subdivision and Instrumentality: Legislative Intent2-7
      • [B] : Section 3(a)(2) Public Instrumentalities2-13
      • [C] : Tax Law Political Subdivisions2-15
      • [D] : Tax Law Instrumentalities2-17
      • [E] : Section 103 Constituted Authorities2-20
      • [F] : The 2016 IRS Proposed Regulations Regarding the Definition of Political Subdivision2-21
    • § 2:1.2 : Multiple Securities in a Single Transaction2-23
  • Figure 2-1 : Financing of Hydroelectric Generating Plant2-25
  • § 2:2 : Analyzing a Transaction Under Section 3(a)(2) and Rule 1312-27
    • § 2:2.1 : Taxable Private Activity Bonds2-37
      • [A] : Rule 131(b): General Revenues of a Governmental Unit2-38
      • [B] : Rule 131(b): Multifamily Housing As Public Projects2-39
    • § 2:2.2 : Taxable Municipal Securities That Are Not Private Activity Bonds2-41
  • § 2:3 : Determining Whether an Instrument in a Financing Structure Is a Security2-43
    • § 2:3.1 : Corporate Guarantees2-46
    • § 2:3.2 : Financial Guarantees2-48
      • [A] : Monoline Bond Insurance2-48
      • [B] : A State Bond Insurance Program2-51
      • [C] : Letters of Credit, Reimbursement Agreements, and Liquidity Facilities2-53
    • § 2:3.3 : Participation Certificates and Custody Receipts2-59
  • § 2:4 : Is the “Separate Security” Separate?2-63
    • § 2:4.1 : Corporate Guarantees2-63
    • § 2:4.2 : Participations: The Mirror-Image Theory2-69
    • § 2:4.3 : Guaranteed Investment Contracts2-77
  • § 2:5 : Does the Separate Security Have Its Own Independent Basis for Exemption?2-80
  • § 2:6 : Wrapping Nonexempt Securities with Exempt Securities2-84
    • § 2:6.1 : Securities Guaranteed by Banks2-85
    • § 2:6.2 : Securities Guaranteed by Governments2-87
    • § 2:6.3 : The SEC’s Financial Guaranty Study2-89
  • § 2:7 : Analyzing Contractual Agreements As Guarantees2-91
    • § 2:7.1 : Use Agreements2-92
    • § 2:7.2 : Power Supply Contracts2-94
      • [A] : Electricity Supply Agreements2-94
      • [B] : Prepaid Natural Gas Supply Agreements2-95
    • § 2:7.3 : Management Contracts2-96
    • § 2:7.4 : Distinguishing Issuers of Securities and Obligated Persons2-97
  • § 2:8 : Derivative Products and Securitizations2-99
    • § 2:8.1 : Custody Receipts2-100
      • [A] : Secondary Market Bond Insurance Programs2-100
  • Figure 2-2 : Custody Receipts for Secondary Market Bond Insurance Program2-103
    • [B] : Stripped Coupons2-105
    • § 2:8.2 : Secondary Market Tender Option Bond Programs2-108
  • Figure 2-3 : Certificates for Secondary Market Tender Option Bond Program2-108
    • § 2:8.3 : Municipal Forwards2-111
    • § 2:8.4 : Inverse Variable-Rate Bonds2-113
    • § 2:8.5 : Swaps2-113
    • § 2:8.6 : Government Securitization of Receivables2-115
      • [A] : Securitization of Tobacco Settlement Payments2-116
      • [B] : A Qualifying Tax-Exempt Issuer2-118
      • [C] : Taxable Financings2-118
      • [D] : Securities Exempt Under Section 3(a)(4)2-120
  • § 2:9 : Municipal Fund Securities2-121
    • § 2:9.1 : Prepaid College Tuition Programs2-121
      • [A] : Is the Prepayment Contract a Security?2-122
      • [B] : Are the Contracts Exempt Securities?2-124
    • § 2:9.2 : Tuition Savings Programs2-127
      • [A] : Is the Trust an Issuer?2-129
      • [B] : What Security Does the Trust Issue?2-130
  • Figure 2-4 : A Trust As an Issuer of a Security2-130
  • [C] : Is the Trust a Political Subdivision or Instrumentality?2-132
  • Figure 2-5 : Public/Private Issues2-133
    • § 2:9.3 : Government Investment Pools2-136
  • Figure 2-6 : A Government Fund As an Issuer of Securities2-138
  • [A] : Instrumentalities of Political Subdivisions2-139
  • § 2:10 : Government Programs; Stimulus Taxable Bonds2-140
    • § 2:10.1 : Build America Bonds2-141
      • [A] : Direct Subsidy Taxable Bonds2-141
      • [B] : Tax Credit BABs2-144
    • § 2:10.2 : Tax Credit Bonds2-145
      • [A] : General Description2-145
      • [B] : Nongovernmental Issuers2-146
      • [C] : Stripped Tax Credits2-147
  • § 2:11 : Nonprofit Corporations2-150
    • § 2:11.1 : Nonprofit Corporations as Issuers2-152
      • [A] : Nonprofit Corporations That Are an Integral Part of a Governmental Unit2-153
      • [B] : Public Corporations Organized As Local Authorities or Special Purpose Districts2-156
      • [C] : 63-20 Private Corporations Organized Under General Nonprofit Corporation Law2-158
      • [D] : Section 150 Nonprofit Corporation Issuers2-165
        • [D][1] : Qualified Scholarship Funding Bonds2-165
        • [D][2] : Volunteer Fire Departments2-169
    • § 2:11.2 : Nonprofit Corporations As Borrowers2-170
      • [A] : Tax-Exempt Qualified 501(c)(3) Bonds2-170
      • [B] : Related SEC No-Action Letters2-171
    • § 2:11.3 : Requirements for a Section 3(a)(4) Exemption2-175
      • [A] : Organizations That Qualify Under Section 3(a)(4)2-175
        • [A][1] : Tax-Exempt Status of Organization2-175
        • [A][2] : Section 501(c)(3) Requirements2-177
        • [A][3] : Definition of Charitable or Educational Purposes2-178
        • [A][4] : The Separate Perspective of the SEC Staff2-179
      • [B] : Nonprofit Corporation Formed for Private Business Purposes2-181
      • [C] : Use of Bond Proceeds for Unrelated Business Purposes2-183
    • § 2:11.4 : Deciding Whether to Request No-Action Under Section 3(a)(2) or Section 3(a)(4); 1934 Act Implications2-186
  • § 2:12 : Exempt Transactions2-189
    • § 2:12.1 : Parsing the Statutory Language of Sections 4(a)(1) and 4(a)(2)2-190
    • § 2:12.2 : Case Law Interpreting Section 4(a)(2)2-192
    • § 2:12.3 : Regulation D: Background and Key Definitions2-194
      • [A] : Statutory Authority2-194
      • [B] : Issuers and Affiliates2-195
      • [C] : Accredited Investors2-195
      • [D] : Counting Purchasers2-197
      • [E] : Purchaser Representative2-198
    • § 2:12.4 : Regulation D: Manner of Offering2-198
      • [A] : Communications That Are Not Offers of Securities2-199
      • [B] : Preexisting Substantive Relationships2-200
      • [C] : Speaking to Municipal Bond Clubs2-201
    • § 2:12.5 : Disclosure Issues2-203
      • [A] : Regulation D Information Requirements2-203
      • [B] : Antifraud Rules2-204
      • [C] : Placement Agent Due Diligence2-205
    • § 2:12.6 : Regulation D: The Three Safe Harbors2-206
      • [A] : Rule 504: Offerings and Sales up to $1 Million2-206
      • [B] : Rule 505: Offerings and Sales up to $5 Million2-207
      • [C] : Rule 506: Offerings and Sales without Regard to Dollar Amount2-207
  • § 2:13 : Restrictions on Resales of Nonpublic Offerings2-209
    • § 2:13.1 : Rule 1442-209
    • § 2:13.2 : The Section 4(1½) Exemption2-212
    • § 2:13.3 : Rule 144A2-212
  • § 2:14 : Side-by-Side Exempt Transactions and Issues of Exempt Securities2-215
    • § 2:14.1 : General Integration Rules2-215
    • § 2:14.2 : Regulation A or Section 3(a)(2) Exempt Securities and Private Placements2-218
  • § 2:15 : Transitioning from the 1933 Act to the 1934 Act2-220
    • § 2:15.1 : Structural Differences2-220
    • § 2:15.2 : Separate Securities Under the 1934 Act2-221
Chapter 3: Investment Company Products in Public Finance
  • § 3:1 : Investment Companies Organized to Invest in Municipal Securities3-3
    • § 3:1.1 : Municipal Unit Investment Trusts3-6
    • § 3:1.2 : Municipal Bond Funds3-8
      • [A] : Closed-End Bond Funds3-8
      • [B] : Open-End Bond Funds (Mutual Funds)3-9
  • § 3:2 : Jurisdictional Reach of 1940 Act Concepts to Cover Other Public Finance Programs3-11
    • § 3:2.1 : An Issuer Engaged Primarily in the Business of Investing3-12
    • § 3:2.2 : An Issue of Securities Separate from the Securities in Which the Issuer Invests3-14
      • [A] : Secondary Market Programs to Sell Small Denomination Participations in Large Denomination Bonds3-15
      • [B] : Programs to Aggregate New Issues into a Pool3-17
    • § 3:2.3 : Distinguishing UITs: Redeemable Securities Representing an Undivided Interest in a Pool of Specified Securities3-19
    • § 3:2.4 : Constructing a Nonexempt Issuer from an Exempt Issuer3-20
      • [A] : Background: The Prudential Case3-22
      • [B] : Section 2(b) Exemption for Government Issuers3-25
      • [C] : Taxable Private Activity Bonds3-28
    • § 3:2.3 : Government Programs3-32
      • [A] : Local Government Investment Pools3-32
      • [B] : Deferred Compensation Plans3-34
      • [C] : Section 529 College Savings Programs3-38
      • [D] : Private Programs Based on Section 5293-40
      • [E] : Government Involvement in the Creation of a Nonexempt Issuer3-41
  • § 3:3 : Use of Underlying 1940 Act Policies to Inform Decisions on the Jurisdictional Reach of the Statute3-43
  • § 3:4 : Certificate Programs in Public Finance3-48
    • § 3:4.1 : 1940 Act Definition of Security Includes Participations3-48
    • § 3:4.2 : Separate Issuers in Municipal Lease Financing Programs3-51
  • § 3:5 : Custody Receipt Programs in Public Finance3-58
    • § 3:5.1 : Secondary Market Bond Insurance Programs3-59
    • § 3:5.2 : Tender Option Bonds3-61
    • § 3:5.3 : Stripped Coupons3-63
    • § 3:5.4 : Municipal Forwards3-65
  • § 3:6 : Section 3(c) Exemptions3-67
    • § 3:6.1 : Private Investment Companies: Section 3(c)(1)3-67
      • [A] : The 100-Beneficial-Owner Rule3-67
      • [B] : No Public Offering3-68
      • [C] : Restricted Securities Under the 1940 Act3-68
      • [D] : Integration Issues Under the 1940 Act3-70
    • § 3:6.2 : Private Investment Companies: Section 3(c))(7)3-72
      • [A] : Qualified Purchasers3-72
      • [B] : Qualified Institutional Buyers (QIBs)3-73
      • [C] : Conversion from a Section 3(c)(1) Exemption to a Section 3(c)(7) Exemption3-73
    • § 3:6.3 : Financial Institutions: Section 3(c)(2)3-73
    • § 3:6.4 : Companies Purchasing Interests in Equipment or Real Estate: Section 3(c)(5)3-74
      • [A] : Purchasing Notes, Receivables, or Interests in Equipment Leases3-75
      • [B] : Purchasing Mortgages or Interests in Real Estate Leases3-75
  • § 3:7 : Structured Finance: Rule 3a-73-76
  • § 3:8 : Municipal Money Market Funds: Rule 2a-73-77
    • § 3:8.1 : “Breaking the Buck”: Prelude to the 2010 and 2014 Amendments to Rule 2a-73-77
    • § 3:8.2 : Basic Policies of the 2014 Amendments3-80
      • [A] : Fees and Gates3-81
      • [B] : Floating Net Asset Value3-82
      • [C] : The Effect of the 2014 Amendments on Municipal Money Market Funds3-83
      • [D] : The Effect of the 2014 Amendments on Local Government Investment Pools3-85
    • § 3:8.3 : Risk-Limiting Provisions: Portfolio Maturity3-86
      • [A] : Variable-Rate Securities3-87
      • [B] : Floating-Rate Securities3-88
    • § 3:8.4 : Risk-Limiting Provisions: Portfolio Quality3-89
      • [A] : Second-Tier Securities3-90
      • [B] : Guarantees and Demand Features3-90
    • § 3:8.5 : Risk-Limiting Provisions: Portfolio Diversity3-92
      • [A] : Second-Tier Securities3-92
      • [B] : National Tax-Exempt Funds3-92
      • [C] : Single-State Tax-Exempt Fund3-93
      • [D] : Diversification of Conduit Securities, Demand Features, Guarantees, and Second-Tier Securities3-93
    • § 3:8.6 : Portfolio Liquidity Requirements3-94
Chapter 4: Financial and Derivative Products
  • § 4:1 : Municipal Asset-Backed Securities4-3
    • § 4:1.1 : SEC and Dodd-Frank Act Definitions of Asset-Backed Securities4-5
    • § 4:1.2 : Types of Public Finance Structures That May Be Characterized As Exchange Act ABS Subject to the Dodd-Frank Act4-6
      • [A] : Single-Family Housing Bonds4-6
      • [B] : Student Loan Bonds4-7
      • [C] : Pools of Loans4-9
      • [D] : Securitization of Municipal Receivables4-9
      • [E] : Secondary Market Securitizations4-10
        • [E][1] : Tender Option Bond Programs4-10
        • [E][2] : Equipment Lease Programs4-11
    • § 4:1.3 : Summary of Dodd-Frank Act Provisions Related to Asset-Backed Securities4-11
      • [A] : Credit Risk Retention4-12
      • [B] : Securitization Disclosure and Reporting4-13
      • [C] : Representations and Warranties; Enforcement Mechanisms4-13
      • [D] : Due Diligence Requirements4-14
      • [E] : Third-Party Due Diligence Reports4-14
    • § 4:1.4 : Rulemaking Activity in Response to the Dodd-Frank Act That May Affect Public Finance4-14
      • [A] : Risk Retention4-14
        • [A][1] : State and Municipal Securitizations4-16
        • [A][2] : Student Loan Bonds4-16
        • [A][3] : Tender Option Bonds4-17
      • [B] : Representations and Warranties; Disclosure of Requests for Repurchase4-19
      • [C] : Third-Party Due Diligence Reports4-21
  • § 4:2 : Forward and Futures Contracts4-23
    • § 4:2.1 : Forward Contracts in the Distribution of Municipal Securities4-27
      • [A] : Compliance with Rule 15c2-124-30
        • [A][1] : No Offers Made4-31
        • [A][2] : Offers Made4-34
      • [B] : Forward Contract Terms4-37
        • [B][1] : Dual Closing4-37
        • [B][2] : Representations4-38
        • [B][3] : Termination Provisions4-39
        • [B][4] : Disclosure Agreements4-40
      • [C] : Forward Delivery Investment Contracts for Municipal Issuers4-43
        • [C][1] : Is the Forward Delivery Contract a Separate Security?4-44
        • [C][2] : Disclosure Issues4-45
      • [D] : MSRB Rule G-17 Required Underwriter Disclosure of Risks to Municipal Issuers4-47
    • § 4:2.2 : Municipal Bond Index Futures4-48
  • § 4:3 : Municipal Interest Rate Swaps4-49
    • § 4:3.1 : Risks to Municipal Issuers4-52
    • § 4:3.2 : SEC Enforcement Activity Related to Municipal Derivatives4-56
  • § 4:4 : The Dodd-Frank Act Regulatory Scheme for Municipal Interest Rate Swaps4-57
    • § 4:4.1 : Jurisdictional Definitions4-58
      • [A] : Swaps and Security-Based Swaps4-58
      • [B] : Municipal Advisors and Municipal Derivatives4-60
      • [C] : Municipal Entities and Special Entities4-61
    • § 4:4.2 : Regulated Entities; Dealers and Major Participants4-63
      • [A] : Swap Dealers and Security-Based Swap Dealers4-63
      • [B] : Major Swap Participants and Major Security-Based Swap Participants4-66
    • § 4:4.3 : General CFTC Business Conduct Standards4-70
      • [A] : CFTC Business Conduct Standards for Interactions with All Counterparties4-72
      • [B] : CFTC Business Conduct Standards for Interactions with Nonentity Counterparties4-72
        • [B][1] : Disclosure of Material Information4-73
        • [B][2] : Suitability of Recommendations4-73
    • § 4:4.4 : CFTC Business Conduct Standards for Interactions with State and Municipal Special Entities4-73
      • [A] : Swap Dealers Acting as Advisors to State and Municipal Special Entities4-74
      • [B] : Swap Dealers and Major Swap Participants Acting as Counterparties to State and Municipal Special Entities4-75
      • [C] : Limitations on Political Contributions to Officials of Governmental Special Entities4-77
        • [C][1] : Swap Dealers4-77
        • [C][2] : Independent Representatives4-79
    • § 4:4.5 : Eligible Contract Participants4-79
    • § 4:4.6 : Mandatory Clearing and Exchange Trading4-80
      • [A] : Clearing If Clearable4-81
      • [B] : End Users4-82
    • § 4:4.7 : CFTC Harmonization of the Regulatory Scheme for Commodity Trading Advisors, Swap Dealer Advisors, Independent Representatives, and Municipal Advisors4-82
    • § 4:4.8 : SEC Harmonization of the Regulatory Scheme for Municipal Advisors, Commodity Trading Advisors, Independent Representatives, and Swap Dealers4-84
Chapter 5: New Issue Timing Under Contract Law and Securities Law from Preliminary Official Statement to Closing
  • § 5:1 : Timeline in Public Finance New Issue Distributions5-2
  • § 5:2 : Offer and Sale Under the 1933 Act Registration Rules5-4
    • § 5:2.1 : Offers5-5
    • § 5:2.2 : Oral and Written Offers5-6
    • § 5:2.3 : The Red Herring: Preliminary Prospectus5-8
    • § 5:2.4 : Sales5-17
  • § 5:3 : Contracts in the Public Finance Timeline5-19
    • § 5:3.1 : The Red Herring: Preliminary Official Statement5-19
    • § 5:3.2 : Master Agreement Among Underwriters5-22
      • [A] : Initial Wire and Pricing Wires5-23
      • [B] : Public Offering Price, Total Takedown, and Concession5-24
      • [C] : Participations5-27
      • [D] : MSRB Rules on Priority of Orders5-29
      • [E] : Representations and Agreements5-31
      • [F] : Contribution and Indemnification5-31
    • § 5:3.3 : The Bond Purchase Agreement5-33
    • § 5:3.4 : Notice of Sale in a Competitive Offering5-44
    • § 5:3.5 : Customer Contracts: Period from Pricing Through Time of Formal Award5-46
      • [A] : Order Periods5-46
      • [B] : Conditional Allocations and Conditional Trades5-47
      • [C] : No Presale Time of Trade for Price Reporting5-50
      • [D] : Time of Formal Award5-53
      • [E] : Time of First Execution of Trades5-55
    • § 5:3.6 : Customer Contracts: The Period from Initial Trade Execution to Settlement5-56
      • [A] : MSRB Time of Trade and SEC Time of Contract of Sale5-56
      • [B] : Confirmations5-59
        • [B][1] : Verbal Commitments Before the Written Confirmation: U.C.C. Article 85-59
        • [B][2] : Written Confirmation5-62
      • [C] : Contract Law Implications of Preliminary and Final Official Statements5-64
      • [D] : SEC Interpretation of Procedures for Amending Customer Contracts After New Disclosures5-67
  • § 5:4 : Timing Issues Under the Antifraud Rules5-70
    • § 5:4.1 : Time Frame of a Sale: From Preliminary Official Statement Through Bond Purchase Agreement to Initial Trade Executions5-71
      • [A] : Time of Sale Disclosure: SEC Rule 1595-71
      • [B] : Time of Sale Disclosure: MSRB Rule G-175-74
      • [C] : Time of Sale Disclosure: Rule 10b-55-76
      • [D] : Stickering the Preliminary Official Statement5-78
    • § 5:4.2 : Time Frame of a Sale: From Bond Purchase Agreement to Closing and Beyond5-79
      • [A] : Duration of “Sale” for Issuers and for Underwriters5-79
      • [B] : Stickering the Final Official Statement5-82
Chapter 6: Dissemination of New Issue Offering Documents; and Appendices 6A-6C
  • § 6:1 : Introduction6-2
  • § 6:2 : Information Dissemination in Registered Offerings6-5
    • § 6:2.1 : Rule 15c2-8 and Section 4(3)6-5
    • § 6:2.2 : Electronic Dissemination in Registered Offerings6-8
    • § 6:2.3 : Securities Offering Reform6-9
      • [A] : Preliminary Prospectus6-11
      • [B] : Final Prospectus: Access Equals Delivery6-12
  • § 6:3 : Information Dissemination Requirements for Public Finance6-15
    • § 6:3.1 : MSRB Rule G-32: Customer Disclosure Requirements6-15
      • [A] : General Rule for Final Official Statement Delivery6-15
      • [B] : Access Equals Delivery6-16
      • [C] : Separate Securities6-17
      • [D] : Municipal Fund Securities6-17
    • § 6:3.2 : Underwriter Primary Offering Submissions to EMMA6-19
      • [A] : Form G-32 Information Dissemination6-19
      • [B] : Official Statement Submission6-20
      • [C] : Standard of Care for Submissions and Rule G-17 Time of Sale Disclosure6-21
      • [D] : Preliminary Official Statement Submission6-23
      • [E] : Exemption for Certain Limited Offerings6-24
      • [F] : Exemption for Certain Commercial Paper Offerings6-25
      • [G] : Advance Refunding Documents6-26
      • [H] : Official Statement Amendments or Stickers6-27
    • § 6:3.3 : MSRB Continuing Disclosure Service6-27
    • § 6:3.4 : MSRB Short-Term Securities Disclosure Service6-28
      • [A] : Auction Rate Securities6-28
      • [B] : Variable Rate Securities6-29
    • § 6:3.5 : Application of Rule G-32 to Remarketings and Conversions Constituting Primary Offerings6-30
      • [A] : Remarketings and Conversions of Variable Rate Securities6-31
      • [B] : Conversions of Auction Rate Securities6-33
    • § 6:3.6 : SEC Rule 15c2-126-35
      • [A] : Participating Underwriters in Primary Offerings6-36
      • [B] : Obtain and Review6-41
      • [C] : Distribution of Preliminary Official Statements6-48
      • [D] : Distribution of Final Official Statements6-50
  • § 6:4 : The Distinction Between Dissemination Rules and Antifraud Rules6-56
    • § 6:4.1 : Updating the Prospectus During the Delivery Period in a Registered Offering6-57
    • § 6:4.2 : Unsold Allotments6-60
    • § 6:4.3 : The Conclusion for Public Finance6-63
  • § 6:5 : Introduction to Electronic Dissemination in Public Finance6-64
  • § 6:6 : Electronic Primary Market Official Statement Disclosure and Dissemination6-65
    • § 6:6.1 : Rule 15c2-12 Underwriter’s Review of Official Statement in Electronic Form6-66
    • § 6:6.2 : Rule 15c2-12 Electronic Dissemination6-68
    • § 6:6.3 : MSRB New Issue Dissemination Rules6-71
  • § 6:7 : Primary Market Electronic Competitive Sales6-71
    • § 6:7.1 : Disintermediation6-73
    • § 6:7.2 : Auction Administrator As Underwriter6-79
    • § 6:7.3 : Primary Market Exempt Transactions6-87
  • § 6:8 : Issuer Websites6-89
    • § 6:8.1 : Coordination of EMMA Filings and Issuer Website Postings6-90
    • § 6:8.2 : Active Management of Website Information; Retention of Final Official Statements6-91
    • § 6:8.3 : Hyperlinks6-96
  • § 6:9 : Online Road Shows Sponsored by Issuers6-97
    • § 6:9.1 : Background6-97
    • § 6:9.2 : Road Shows After Securities Offering Reform6-99
    • § 6:9.3 : Municipal Internet Road Shows6-100
      • [A] : The 2013 NetRoadshow No-Action Letter6-101
        • [A][1] : Application of Dissemination Rules to Electronic Road Shows6-102
        • [A][2] : Municipal Road Show Transmission to Retail Investors6-103
      • [B] : Liability Issues in Municipal Internet Road Shows6-105
  • Appendix 6A : MSRB Rule G-32App. 6A-1
  • Appendix 6B : SEC Rule 15c2-12App. 6B-1
  • Appendix 6C : SEC Rule 15c2-8App. 6C-1
Chapter 7: Underwriters’ Due Diligence on New Issues of Municipal Securities
  • § 7:1 : Who Is an Underwriter?7-4
    • § 7:1.1 : 1933 Act Background for Registered Offerings7-4
      • [A] : Application of the Section 2(11) Definition7-4
      • [B] : Participants Generally and Inadvertent Underwriters7-10
      • [C] : Selling Group Members and Nonparticipating Dealers7-13
      • [D] : Control Persons7-14
      • [E] : “Coming to Rest”: Two Presumptions7-15
    • § 7:1.2 : Public Finance Antifraud Rules and Rule 15c2-127-18
      • [A] : Antifraud Terms and the Rule 15c2-12 Definition of Underwriter7-18
      • [B] : Policy Differences in Finding Underwriter Status in the Registration Rules and the Antifraud Rules7-20
      • [C] : Definitional Differences in the Meaning of Underwriter Under the Registration Rules and the Antifraud Rules7-22
      • [D] : A Primary Offering Under Rule 15c2-127-23
    • § 7:1.3 : Dealer Trades and Resales During the Underwriting Period7-25
      • [A] : Dealer Transactions Under Section 4 of the 1933 Act7-25
      • [B] : Conditional Presale Trading and When-Issued Trading of Municipal Securities7-26
  • Figure 7-1 : Dealer Trades During the Underwriting Period7-28
    • [C] : Primary Market Dealer Resales to Customers7-30
    • § 7:1.4 : Sales and Resales of Privately Placed Securities7-32
      • [A] : Nonpublic Offerings7-32
      • [B] : The Rule 15c2-12 Limited Placement Exemption7-34
      • [C] : Downstream Sales of Restricted Securities: Rule 144 and Rule 15c2-127-36
      • [D] : Rule 144A7-39
    • § 7:1.5 : Regulation M: Magnitude and Selling Effort7-40
  • § 7:2 : Illustrations of Potential Redistributions, Secondary Distributions, or Issuer Reofferings in Public Finance7-43
    • § 7:2.1 : Twenty-Seven Factors Used to Determine Underwriter Status7-43
    • § 7:2.2 : Institutional “Investors” Flipping Municipal Securities7-45
    • § 7:2.3 : “Rolling Over” Commercial Paper7-48
    • § 7:2.4 : Remarketing Variable-Rate Securities7-51
    • § 7:2.5 : Soliciting Orders on Auction Rate Securities7-54
    • § 7:2.6 : Negotiating Forward Contracts7-56
    • § 7:2.7 : Resales for an Issuer Who Purchases Its Own Securities in the Market7-57
    • § 7:2.8 : Tender Option Bond Programs7-61
  • § 7:3 : Due Diligence As a Responsibility of Underwriting Municipal Securities7-67
    • § 7:3.1 : Background Issues7-67
      • [A] : The Gatekeeper Theory in Public Finance7-67
      • [B] : Statutory Sources of the Underwriters’ Due Diligence Obligation7-70
      • [C] : Nonlegal Reasons for Public Finance Due Diligence7-73
    • § 7:3.2 : The Fair Dealing Basis of Responsibility7-74
      • [A] : MSRB Rule G-177-78
      • [B] : MSRB Rule G-197-79
    • § 7:3.3 : The Implied Representation Basis of Responsibility7-81
    • § 7:3.4 : SEC’s Interpretation of Municipal Underwriters’ Responsibilities7-83
      • [A] : The General Standard7-84
      • [B] : SEC Updates of the General Standard and Extension to Issuer Continuing Disclosure Undertakings7-85
      • [C] : Factors to Be Considered7-87
      • [D] : Competitive Bidding7-90
      • [E] : SEC’s WPPSS Report7-91
    • § 7:3.5 : The Difference Between a Rule 15c2-12 Review and Due Diligence Obligations7-93
  • § 7:4 : Illustrations of Key Components of Due Diligence in Corporate Cases7-95
  • § 7:5 : Practical Procedures for Conducting Municipal Due Diligence7-101
    • § 7:5.1 : General Principles7-101
      • [A] : Knowledge of Industry and Issuer7-101
      • [B] : Use of Proceeds7-103
      • [C] : Checklists and Training7-104
        • [C][1] : The Upside of Checklists7-104
        • [C][2] : The Downside of Checklists7-105
        • [C][3] : Comments of the SEC’s Office of Compliance Inspections and Examinations7-106
      • [D] : The Document Request List; Reading Minutes7-107
      • [E] : Investigating Outside Sources7-109
      • [F] : Assignments to Underwriters’ Counsel7-110
      • [G] : The Due Diligence Meeting7-111
      • [H] : Retaining Notes and Drafting Due Diligence Memoranda7-112
      • [I] : 2012 Risk Alert on Supervision7-114
    • § 7:5.2 : Reasonable Prudence and Industry Standards7-115
    • § 7:5.3 : Comfort Letters7-118
    • § 7:5.4 : Specific Due Diligence Procedures Required of Orange County Underwriters in SEC Cease-and-Desist Orders7-125
      • [A] : Review Based on Media Information7-128
      • [B] : Review of Prior Financings7-129
      • [C] : Inquiry of Other Departments in the Firm7-129
  • § 7:6 : The Due Diligence Defenses in Civil Litigation and Enforcement Actions7-132
    • § 7:6.1 : Section 117-132
    • § 7:6.2 : Section 12(a)(2)7-137
    • § 7:6.3 : Rule 10b-57-140
    • § 7:6.4 : Section 17(a)7-145
  • § 7:7 : Rule 176: Relevant Circumstances to Evaluate Corporate Due Diligence7-147
    • § 7:7.1 : Historical Background to Rule 1767-147
    • § 7:7.2 : WorldCom and Rule 1767-153
    • § 7:7.3 : Post-WorldCom Procedures Regarding Corporate Financial Statements7-156
  • § 7:8 : 1988 Interpretation: Relevant Circumstances to Evaluate Municipal Due Diligence7-159
    • § 7:8.1 : Rule 176 and the 1988 Interpretation Compared7-159
  • Figure 7-2 : Comparison of Rule 176 and the 1988 Interpretation7-160
    • § 7:8.2 : Breaking Down Municipal Due Diligence7-161
    • § 7:8.3 : Post-WorldCom Procedures Regarding Municipal Financial Statements7-164
  • § 7:9 : Liability of Nonlead Underwriters: Comanagers and Syndicate Members7-169
    • § 7:9.1 : The General Corporate Rule and the Fundamental Difference in Public Finance Liability7-169
    • § 7:9.2 : Rule 176 and the Role of the Nonlead Corporate Underwriters As a Relevant Circumstance7-173
    • § 7:9.3 : 1988 Interpretation and the Role of the Nonlead Municipal Underwriters As a Factor to Be Considered7-177
  • § 7:10 : Due Diligence Responsibilities of Broker-Dealers Acting As a Placement Agent in a Private Placement of Securities7-179
    • § 7:10.1 : The Status of a Broker-Dealer Acting As a Placement Agent7-179
    • § 7:10.2 : Due Diligence Responsibilities of a Broker-Dealer in a Limited Offering7-182
      • [A] : FINRA Notice on Regulation D Obligations of Broker-Dealers7-183
      • [B] : MSRB Guidance on Private Placement Broker-Dealer Disclosure of Its Role to an Issuer7-186
      • [C] : Offers Limited to Institutional Investors7-189
    • § 7:10.3 : FINRA Notice Description of Due Diligence Procedures in Regulation D Offering7-192
Chapter 8: Disclosure Issues
  • § 8:1 : Introduction8-3
  • § 8:2 : Getting Organized8-7
    • § 8:2.1 : Issuer Policies and Procedures8-7
    • § 8:2.2 : Audit Committee8-13
    • § 8:2.3 : Disclosure Practices Working Group8-15
    • § 8:2.4 : Issuer Websites8-17
      • [A] : Considerations in Deciding Whether to Have a Website8-17
      • [B] : Official Statement Archives8-20
      • [C] : Is Website Disclosure “Public” Disclosure?8-21
      • [D] : Hyperlinks from Websites to Third-Party Sites8-24
      • [E] : Summary Statements on Websites8-26
      • [F] : Interactive Websites: Chat Rooms and Blogs8-27
      • [G] : Website Management8-29
  • § 8:3 : Drafting the Official Statement8-30
    • § 8:3.1 : Plain-English Considerations8-30
    • § 8:3.2 : Drafting in Light of the TSC Industries Standard8-34
  • Figure 8-1 : Water Marketing Financing8-35
  • Figure 8-2 : Resource Recovery Variable-Rate Financing8-41
    • § 8:3.3 : Drafting “In Light of the Circumstances”8-42
      • [A] : Commercial Paper and Variable-Rate Demand Obligations8-43
      • [B] : Variable-Rate Obligations and Short-Term Securities Sold to Money Market Funds8-46
    • § 8:3.4 : Drafting Forward Statements in Public Finance8-48
      • [A] : Projections and Estimates8-48
      • [B] : Bespeaks-Caution Doctrine8-51
      • [C] : PSLRA Safe Harbor8-55
      • [D] : SEC v. Greater Wenatchee Regional Events Center Public Facilities District8-58
    • § 8:3.5 : Drafting Risk Factors8-60
  • § 8:4 : Financial Statement Disclosure Issues8-62
    • § 8:4.1 : Disclosure Problems Caused by Use of Aged Financial Statements8-62
    • § 8:4.2 : Quantitative Versus Qualitative Materiality: SAB 998-68
    • § 8:4.3 : Pro Forma Statements8-71
    • § 8:4.4 : Management Discussion and Analysis: GASB 348-72
    • § 8:4.5 : Auditor Consents and Related Disclosure8-75
    • § 8:4.6 : Interim Financial Reports8-79
  • § 8:5 : Pension Funding Obligations8-82
    • § 8:5.1 : Preliminary Considerations8-85
    • § 8:5.2 : The Funded Ratio: A Disclosure Snapshot of Pension Plan Financial Health8-87
      • [A] : Measuring the Present Value of Future Pension Liability8-90
      • [B] : Asset Valuation under GASB Statement No. 67 and GASB Statement No. 688-93
    • § 8:5.3 : The Pension System, Governance, Plan Benefits8-94
      • [A] : Plan Structure8-94
      • [B] : Governance8-96
      • [C] : Pension Benefits8-97
      • [D] : Legal Protection of Plan Benefits8-99
      • [E] : Investment Management8-103
      • [F] : OPEBs and GASB Statement No. 458-104
    • § 8:5.4 : Government Funding of the Normal Cost and Amortization of Unfunded Liability8-105
      • [A] : The Lost ARC8-105
      • [B] : Task Force Recommendations8-108
      • [C] : Pension Obligation Bonds8-110
    • § 8:5.5 : Disclosure Implications of the SEC Enforcement Actions Against New Jersey, Illinois, and Kansas8-112
      • [A] : New Jersey8-112
      • [B] : Illinois8-115
      • [C] : Kansas8-118
  • § 8:6 : Disclosure of Legal Issues Related to the Security for Municipal Bonds8-119
    • § 8:6.1 : Disclosure Issues in the Use of the Term “Pledge”8-122
    • § 8:6.2 : General Obligation Bonds8-125
      • [A] : What Is Full Faith and Credit?8-126
        • [A][1] : Specific Items for Disclosure Related to Full Faith and Credit Bonds8-128
        • [A][2] : Disclosures Based on Constitutional Law in New York8-130
      • [B] : Statutory Liens; Rhode Island8-133
      • [C] : Unlimited-Tax and Limited-Tax General Obligation Bonds8-135
      • [D] : Substantive Issues for Disclosure8-136
      • [E] : Procedural Issues for Disclosure8-137
    • § 8:6.3 : Revenue Bonds8-138
      • [A] : Pledge of, or Security Interest in, Revenues8-138
      • [B] : Bankruptcy Code8-140
        • [B][1] : Right of an Issuer to File a Chapter 9 Petition8-140
        • [B][2] : Special Revenues8-143
  • § 8:7 : Bank Loans8-145
Chapter 9: Continuing Disclosure
  • § 9:1 : Introduction9-3
  • § 9:2 : Line Item Disclosure Under the 1933 and 1934 Acts9-4
    • § 9:2.1 : The Effect of the Sarbanes-Oxley Act on 1934 Act Reporting9-9
    • § 9:2.2 : Proposal for Conduit Borrowers to Be Reporting Companies9-10
  • § 9:3 : Continuing Disclosure Duties Under Rule 10b-59-10
    • § 9:3.1 : Materiality9-10
    • § 9:3.2 : Duty to Correct and Duty to Update; Forward Statements9-14
    • § 9:3.3 : Standard of Care in the Making of Statements and Press Releases; Responses to Rumors9-20
    • § 9:3.4 : Insider Trading and the Issuer’s Disclosure Duty9-24
    • § 9:3.5 : Issuer and Underwriter Disclosure During the Trading Market9-26
    • § 9:3.6 : Timing and Method of Secondary Market Disclosure9-32
  • § 9:4 : SEC Statutory Authority to Require Periodic Secondary Market Disclosure in Public Finance9-34
    • § 9:4.1 : 1934 Act Limitations on SEC Rules9-35
      • [A] : 1934 Act Section 239-35
      • [B] : Tower Amendment9-37
    • § 9:4.2 : Statutory Basis for Continuing Disclosure Agreements9-43
    • § 9:4.3 : Rule 15c2-12 Continuing Disclosure Agreements and the Antifraud Rules9-45
    • § 9:4.4 : Continuing Disclosure Agreements and the 1994 Interpretative Release9-50
  • § 9:5 : Drafting, Filing, and Reviewing Documents Required by Continuing Disclosure Agreements9-53
    • § 9:5.1 : General9-53
    • § 9:5.2 : The 2008 Amendments9-56
    • § 9:5.3 : The 2010 Amendments9-57
      • [A] : Variable-Rate Demand Obligations9-57
      • [B] : Expansion and Changes to Event Notices9-59
    • § 9:5.4 : Expansion of EMMA to Receive Voluntary Continuing Disclosure9-61
    • § 9:5.5 : Selected Topics in Voluntary Postings on EMMA9-62
      • [A] : Bank Loans9-62
      • [B] : Material Events in Addition to the Rule 15c2-12 Specified Events9-66
      • [C] : Corrections, Updates, and Remedying Selective Disclosure9-69
      • [D] : Interim Financial Reports9-70
    • § 9:5.6 : The Consequences of an Issuer’s Misrepresentation of Its Continuing Disclosure Undertakings9-71
      • [A] : SEC Enforcement Power9-71
      • [B] : City of Harrisburg Enforcement Action9-72
    • § 9:5.7 : The Five-Year Look-Back Rule: Issuers and Obligated Persons9-73
      • [A] : Issuer Misstatements Related to Its Own Securities9-75
      • [B] : Conduit Borrowing Analysis9-77
      • [C] : Key Phrases in the Look-Back Rule9-79
        • [C][1] : “A Description of”9-79
        • [C][2] : “Any Instances”9-80
        • [C][3] : “In All Material Respects”9-82
      • [D] : Silence As a Disclosure Strategy9-83
    • § 9:5.8 : The SEC’s MCDC Initiative: Issuers, Obligated Persons, and Underwriters9-85
      • [A] : The Terms of the MCDC Initiative9-85
      • [B] : Consequences of Self-Reporting and Not Self-Reporting9-88
      • [C] : Drafting New Continuing Disclosure Agreements and the Five-Year Look-Back Disclosure9-90
    • § 9:5.9 : Underwriters’ Due Diligence on Past Compliance9-91
      • [A] : The 2010 Adopting Release Guidance9-91
        • [A][1] : Conducting the Review9-91
        • [A][2] : Procedures When Review Shows Noncompliance9-93
      • [B] : Issuer or Obligated Person Covenants on Past Compliance9-96
      • [C] : Resolving Disagreements About Past Compliance Disclosure9-96
    • § 9:5.10 : Amending Continuing Disclosure Agreements9-97
  • § 9:6 : “Secondary Market” Primary Offerings or Distributions: Remarketing Municipal Securities9-98
    • § 9:6.1 : When Is There a Primary Offering After a New Issue Closing?9-98
    • § 9:6.2 : Primary or Secondary Distributions and Determining Whether a Remarketing Agent Is an Underwriter9-104
    • § 9:6.3 : The Duty of an Issuer to Speak Occasioned by a Remarketing9-106
  • § 9:7 : Auction Rate Securities9-108
    • § 9:7.1 : Conversions of Auction Rate Securities9-110
      • [A] : Conversion to New Auction Rate Period9-110
      • [B] : Conversion to Variable-Rate Securities9-111
      • [C] : Conversion to Fixed-Rate Securities9-112
    • § 9:7.2 : Issuer Bidding in Auctions9-113
      • [A] : Required Disclosure9-114
      • [B] : The Duty to Speak in a Subsequent Resale9-118
  • § 9:8 : Selective Disclosure9-119
    • § 9:8.1 : Regulation FD for Reporting Companies9-123
    • § 9:8.2 : Selective Disclosure Law Applicable to Public Finance9-127
  • § 9:9 : Trustees and Trust Indentures9-131
    • § 9:9.1 : Trust Indenture Act of 19399-133
    • § 9:9.2 : Predefault Disclosure Outside the Trust Indenture Act of 19399-137
    • § 9:9.3 : Fair Dealing in Notices of Redemption9-140
Chapter 10: Broker-Dealer Regulation
  • § 10:1 : Municipal Securities Broker-Dealers10-6
    • § 10:1.1 : What Is the Reach of the Broker-Dealer Definition?10-6
    • § 10:1.2 : The Finder Exemption and Its Limitations; Placement Agents10-10
    • § 10:1.3 : Municipal Financial Advisors; Revocation of the Dominion Resources No-Action Letter10-12
    • § 10:1.4 : The Bank Exemptions and Their Limitations10-15
      • [A] : Municipal Securities Dealers10-15
      • [B] : Municipal Securities Brokers10-18
      • [C] : The Term “Exempted Securities” As It Applies to Broker-Dealer Registration Requirements10-19
      • [D] : Municipal Securities “Push Out” Rules; Bank Private Placements10-21
    • § 10:1.5 : The Analysis of Bank Loans to Municipalities and Bank Direct Purchases of Municipal Securities10-25
      • [A] : Commercial Loan or Investment Security10-26
        • [A][1] : Public Finance Examples10-26
        • [A][2] : The Reves Case: Promissory Notes and Securities10-27
        • [A][3] : Loan Participations10-31
      • [B] : Is the Bank a Dealer?10-32
        • [B][1] : The General Definition10-32
        • [B][2] : Bank Exceptions10-33
      • [C] : Is the Bank a Broker?10-35
        • [C][1] : Placing Municipal Securities with a Nonaffiliate10-35
        • [C][2] : Placing Municipal Securities with an Affiliate Broker-Dealer10-37
    • § 10:1.6 : Intermediaries in Municipal Securities Lease Purchase Transactions10-38
    • § 10:1.7 : Electronic Trading Platforms10-42
    • § 10:1.8 : Can a State or Political Subdivision Issuer, or Its Officials and Employees, Be Inadvertent Broker-Dealers?10-42
  • § 10:2 : The Regulatory Scheme for Municipal Securities Broker-Dealers
    • § 10:2.1 : What Is the Basic Broker-Dealer Obligation to Investors?10-46
      • [A] : Special Relationships That Lead to a Fiduciary Duty10-49
      • [B] : Principal-to-Principal Transactions in Municipal Securities10-52
      • [C] : Conceptual Harmonization of Standard of Conduct; Broker-Dealers, Investment Advisers, and Municipal Advisors10-53
        • [C][1] : SEC Assumptions for a Uniform Broker-Dealer and Investment Adviser Fiduciary Duty Rule10-54
        • [C][2] : Fiduciary Duty: Duty of Loyalty and Duty of Care10-56
    • § 10:2.2 : Obligations of Broker-Dealers to Persons Other Than Investors10-57
    • § 10:2.3 : The Beginning of Municipal Broker-Dealer Regulation: 1975 Amendments to the 1934 Act10-58
    • § 10:2.4 : Self-Regulation in the Over-the-Counter Markets10-62
      • [A] : FINRA10-64
      • [B] : MSRB10-65
      • [C] : Dodd-Frank Act Expansion of MSRB Jurisdiction10-68
      • [D] : Clearing Agencies10-69
    • § 10:2.5 : The Self-Regulatory Concept: Coordinating MSRB and SEC Jurisdiction10-70
      • [A] : Rules of General SEC Jurisdiction10-73
      • [B] : Rules of Overlapping Jurisdiction10-74
        • [B][1] : Recordkeeping Rules10-74
        • [B][2] : Churning10-79
        • [B][3] : Disclosure of Material Information10-80
        • [B][4] : Suitable Recommendations10-83
      • [C] : Distinguishing Statutory Limitations on MSRB and SEC Rules That Directly or Indirectly Affect Issuers10-85
  • § 10:3 : Registration and Qualification Rules10-93
    • § 10:3.1 : Registration of Municipal Broker-Dealer Firms with the SEC10-93
    • § 10:3.2 : Rule G-1, Broker-Dealer Registration Requirements for Bank Dealers10-96
    • § 10:3.3 : Registration of Brokers, Dealers, and Municipal Securities Dealers with the MSRB10-103
      • [A] : Consolidated Registration on Form A-12; Fees10-103
      • [B] : Initial and Annual Fees10-104
      • [C] : Dealer Transaction Fees10-104
      • [D] : Municipal Securities Activities and Municipal Advisory Activities10-105
      • [E] : Key MSRB Jurisdictional Definitions10-106
        • [E][1] : Broker, Dealer, Municipal Securities Dealer, and Municipal Advisor10-106
        • [E][2] : Rule D-8, Bank Dealer10-106
        • [E][3] : Rule D-11, Associated Person10-106
        • [E][4] : Rule D-12, Municipal Fund Security10-108
    • § 10:3.4 : Field Examinations of Broker-Dealers and Banks10-110
      • [A] : FINRA Priorities Letter10-112
      • [B] : MSRB Compliance Advisory10-114
    • § 10:3.5 : Rule G-2 and Rule G-3, Professional Qualifications10-114
      • [A] : Municipal Securities Representative, Series 52, Series 7 and Series 6 Exams10-115
      • [B] : Municipal Securities Principal, Series 53 and Series 51 Exams10-118
      • [C] : Municipal Securities Sales Principal, Series 9/10 Exams10-119
    • § 10:3.6 : Rule G-3, Continuing Education10-120
    • § 10:3.7 : Rule G-4, Statutory Disqualification10-121
  • § 10:4 : Primary Market Rules Related to Manipulation and Fraudulent Pricing10-122
    • § 10:4.1 : Price Manipulation During a Distribution10-122
    • § 10:4.2 : Bona Fide Public Offering at the Initial Offering Price10-126
      • [A] : FINRA Rule 513010-126
      • [B] : Misconduct Associated with a Failure to Make a Bona Fide Public Offering10-128
      • [C] : Public Finance Practices10-130
        • [C][1] : The Bond Purchase Agreement10-130
        • [C][2] : The Agreement Among Underwriters10-131
    • § 10:4.3 : SEC v. Edward D. Jones & Co.10-132
    • § 10:4.4 : The Use of Spread in Undersubscribed Deals10-134
    • § 10:4.5 : Fixed-Price Corporate Offerings and the Papilsky Rules10-142
    • § 10:4.6 : Stabilization10-144
    • § 10:4.7 : Market Making10-149
    • § 10:4.8 : Application of Antitrust Rules10-157
      • [A] : Rules of the Self-Regulatory Organizations10-157
      • [B] : Broker-Dealer Conduct10-162
  • § 10:5 : MSRB Syndicate and Uniform Practice Rules10-164
    • § 10:5.1 : Rule G-11, Primary Offerings10-164
      • [A] : The Basics of Syndicate Practices10-164
      • [B] : Priority Provisions10-168
        • [B][1] : Priorities Based on Syndicate Compensation10-168
        • [B][2] : Priorities of Customer and Retail Orders10-171
      • [C] : Retail Order Period10-172
        • [C][1] : Selling Groups and Distribution Agreements10-173
        • [C][2] : Broker-Dealer Representations and Disclosures Related to the Retail Order Period10-174
      • [D] : Restrictions on Underwriters Voting Consents to Amend Documents10-176
    • § 10:5.2 : Rule G-12, Clearing Agency Settlement10-177
      • [A] : Two-Day (T+2) Settlement Cycle10-182
      • [B] : Close-Out Procedures10-183
    • § 10:5.3 : Rule G-13, Price Quotations10-184
    • § 10:5.4 : Rule G-14, Transaction Reporting: Price Transparency10-189
    • § 10:5.5 : Rule G-15, Customer Confirmations10-193
      • [A] : Minimum Denominations10-196
      • [B] : Forwarding Official Communications10-197
    • § 10:5.6 : Rule G-34, CUSIP Numbers and New Issue and Market Information Requirements10-198
      • [A] : Time of Formal Award and Time of First Execution10-200
      • [B] : Timing for CUSIPs10-201
      • [C] : Deadlines for NIIDS Information10-203
      • [D] : Application for Depository Eligibility10-204
    • § 10:5.7 : Municipal Fund Securities and Uniform Practice Rules10-204
  • § 10:6 : MSRB Fair Practice Rules10-206
    • § 10:6.1 : Rule G-17, Fair Dealing10-206
      • [A] : Analytics of Rule G-1710-207
      • [B] : Time-of-Trade Disclosure10-209
        • [B][1] : History of MSRB Rule G-17 Interpretive Guidance10-209
        • [B][2] : The MSRB’s Rule G-17 Rationalization Project10-212
        • [B][3] : Rule G-47 on Time-of-Trade Disclosure Obligations10-213
      • [C] : Time-of-Trade Disclosure Obligations to Other Broker-Dealers or Institutional Investors; Sophisticated Municipal Market Professionals10-214
        • [C][1] : Inter-Dealer Trades10-214
        • [C][2] : Background on Time-of-Trade Disclosure Obligations to Institutional Investors10-215
        • [C][3] : MSRB Rule D-15 and Rule G-48 on SMMPs10-217
      • [D] : Electronic Brokerage Systems10-218
      • [E] : Underwriter Rule G-17 Obligations to Issuers10-219
        • [E][1] : Disclosure of the Underwriter’s Role10-221
        • [E][2] : Disclosures Related to the Underwriter’s Compensation10-222
        • [E][3] : Representations to Issuers, Disclosure and Closing Documents10-223
        • [E][4] : Disclosures Related to the Transaction and Conflicts of Interest10-224
        • [E][5] : Retail Order Periods10-225
    • § 10:6.2 : Best Execution10-226
      • [A] : Thin Markets; Procedures10-229
      • [B] : Broker’s Brokers10-230
      • [C] : Policies and Procedures10-230
      • [D] : Documentation10-231
    • § 10:6.3 : Rule G-19; Suitability10-233
    • § 10:6.4 : Rule G-23; Activities of Broker-Dealers Acting As Financial Advisors10-236
    • § 10:6.5 : Rule G-30; Fair Pricing10-239
      • [A] : Fair Pricing in Principal and Agency Transactions10-240
      • [B] : General Principles10-240
      • [C] : Transaction Chains and Thin Markets10-241
    • § 10:6.6 : Rule G-32, New Issue Disclosure of Underwriting Arrangements10-243
      • [A] : Disclosure of Underwriter Compensation10-243
      • [B] : Securities Not Reoffered10-245
    • § 10:6.7 : Municipal Fund Securities and Fair Practice Rules10-247
  • § 10:7 : MSRB Rule G-32, Document Dissemination Rules10-250
  • § 10:8 : Supervision Rules10-250
    • § 10:8.1 : Defining a Supervisor10-253
    • § 10:8.2 : The Requisites of Supervision10-255
    • § 10:8.3 : Rule G-27, Policies and Procedures10-257
    • § 10:8.4 : Rule G-27, Review of Written and Electronic Correspondence10-259
  • § 10:9 : MSRB Market Integrity Rules10-260
    • § 10:9.1 : Political Contributions10-260
    • § 10:9.2 : Quid Pro Quo Corruption10-261
    • § 10:9.3 : The Two-Year Ban10-265
      • [A] : The Ban Resulting from a Contribution by a Municipal Advisor Third-Party Solicitor10-268
      • [B] : Cross-Bans10-270
      • [C] : Excluded Contributions; Two-Year Look-back10-272
    • § 10:9.4 : Prohibition on Soliciting and Coordinating Contributions10-274
    • § 10:9.5 : Prohibition on Circumvention of Rule G-3710-275
    • § 10:9.6 : Required Disclosure to MSRB10-275
    • § 10:9.7 : Constitutional Issues10-276
      • [A] : Are Rules of the MSRB Subject to Constitutional Limitations?10-276
      • [B] : The Blount First Amendment Decision10-277
    • § 10:9.8 : Rule G-20, Gifts and Gratuities10-281
    • § 10:9.9 : Rule G-38, Consultants10-282
    • § 10:9.10 : Municipal Fund Securities and Market Integrity Rules10-284
  • § 10:10 : Conflicts of Interest10-287
    • § 10:10.1 : Chinese Wall Procedures10-288
      • [A] : Firm Policies and Procedures10-288
      • [B] : Crossing the Wall10-291
      • [C] : The Sales and Trading Side As a Reservoir of Knowledge for the Advisory Side10-292
    • § 10:10.2 : Official Statement Disclosure of Conflicts10-294
      • [A] : WorldCom Inc. Securities Litigation and SEC Enforcement Actions10-294
      • [B] : Limitations on MSRB Authority10-297
    • § 10:10.3 : Research Analysts and Conflicts10-299
      • [A] : Characteristics of Municipal Securities Research10-299
      • [B] : The Global Research Analyst Settlement and New Firewalls10-301
      • [C] : The Sarbanes-Oxley Act: NYSE and NASD Rules on Research Analyst Conflicts10-305
      • [D] : SEC Regulation AC10-307
      • [E] : TBMA Guiding Principles10-309
Chapter 11: Municipal Advisor Regulation; and Appendices 11A-11C
  • § 11:1 : Dodd-Frank Act Jurisdiction over Municipal Advisors11-4
    • § 11:1.1 : Regulatory Framework11-4
      • [A] : SEC and MSRB Rulemaking Authority11-8
      • [B] : Application of the Tower Amendment to Municipal Advisors11-11
    • § 11:1.2 : The Importance of the Term “Advice”; the Advice Standard11-11
      • [A] : The General-Information Exclusion11-13
      • [B] : The Tension Between Giving Particularized Information and Avoiding a Recommendation Under the General-Information Exclusion11-15
        • [B][1] : Disclaimers11-16
        • [B][2] : Effect of Overall Course of Conduct11-17
      • [C] : Business Promotional Materials Provided by Potential Underwriters11-18
        • [C][1] : Disclaimers in the Context of Potential Underwriter Promotional Material11-20
        • [C][2] : Effect of Overall Course of Conduct in the Context of Potential Underwriter Promotional Materials11-21
    • § 11:1.3 : Municipal Advisory Activity11-22
  • § 11:2 : Key Definitions and SEC Interpretive Guidance11-22
    • § 11:2.1 : Municipal Entity and Obligated Person11-22
    • § 11:2.2 : Treatment of Officials, Board Members, and Employees of a Municipal Entity or Obligated Person As Possible Municipal Advisors11-26
    • § 11:2.3 : Issuance of Municipal Securities11-27
    • § 11:2.4 : Municipal Financial Products11-28
      • [A] : Municipal Derivatives11-29
      • [B] : Guaranteed Investment Contracts11-31
      • [C] : Investment Strategies11-32
    • § 11:2.5 : Solicitation of a Municipal Entity or Obligated Person11-34
  • § 11:3 : The Underwriter Exclusion11-35
    • § 11:3.1 : Broker-Dealer Activities Within or Not Within the Underwriter Exclusion11-36
    • § 11:3.2 : The Relationship of the Underwriter Exclusion to MSRB Rule G-17 and MSRB Rule G-2311-39
    • § 11:3.3 : Persons Engaged in Activities Similar to the Underwriting of Municipal Securities11-44
      • [A] : Placement Agents11-44
      • [B] : Dealers or Agents in Tender Offers or Exchange Transactions11-44
      • [C] : Remarketing Agents11-45
      • [D] : Commercial Paper Dealers11-46
      • [E] : Brokerage Services11-47
    • § 11:3.4 : Time and Method of the Engagement of an Underwriter11-48
    • § 11:3.5 : Post-Issuance Advice11-50
      • [A] : Official Statement Corrections11-50
      • [B] : Continuing Disclosure Filings11-51
      • [C] : Due Diligence on Rule 15c2-12 Compliance11-52
  • § 11:4 : The Registered Investment Adviser Exclusion11-53
  • § 11:5 : The Registered Commodity Trading Advisor Exclusion; Exemption for Swap Dealers11-56
  • § 11:6 : The Exclusion for an Attorney Providing Legal Advice11-58
    • § 11:6.1 : General Information11-58
    • § 11:6.2 : The Type of Advice11-59
    • § 11:6.3 : The Recipient of the Advice11-59
  • § 11:7 : The Exclusion for an Engineer Providing Engineering Advice11-60
  • § 11:8 : The Exemptions11-61
    • § 11:8.1 : Accountants11-61
    • § 11:8.2 : Banks11-62
    • § 11:8.3 : Responses to Requests for Proposals or Qualifications11-64
    • § 11:8.4 : Participation by an Independent Registered Municipal Advisor11-65
  • § 11:9 : Registration of Municipal Advisors11-67
    • § 11:9.1 : Registration with the SEC11-67
      • [A] : Form MA11-67
      • [B] : Form MA-I11-69
    • § 11:9.2 : Registration with MSRB11-70
      • [A] : Form A-1211-70
      • [B] : Fees11-70
  • § 11:10 : Professional Qualifications11-71
    • § 11:10.1 : Municipal Advisor Representative Examination11-71
    • § 11:10.2 : Municipal Advisor Principal Examination11-71
    • § 11:10.3 : Municipal Advisor Continuing Education Requirements11-72
  • § 11:11 : Rule G-44: Municipal Advisor Supervisory and Compliance Obligations11-73
    • § 11:11.1 : Purpose of In-House Supervisors and Compliance Personnel11-73
    • § 11:11.2 : Supervisory System and Procedures11-74
    • § 11:11.3 : Compliance Processes and Chief Compliance Officer11-76
  • § 11:12 : The Fiduciary Duty of Municipal Advisors to Their Municipal Entity Clients11-79
    • § 11:12.1 : The Dodd-Frank Act Standard11-79
    • § 11:12.2 : Reconciling the Interests of Municipal Entities and the Interests of Investors11-81
    • § 11:12.3 : The Dodd-Frank Act Delegation of Authority to the MSRB11-82
  • § 11:13 : The Fair Dealing Obligation of Municipal Advisors11-83
    • § 11:13.1 : MSRB Rule G-1711-83
    • § 11:13.2 : First Southwest Cease-and-Desist Order11-83
  • § 11:14 : Rule G-42: Core Standards of Conduct for Nonsolicitor Municipal Advisors11-84
    • § 11:14.1 : General Standards of Conduct11-85
      • [A] : Duty of Care11-86
      • [B] : Duty of Loyalty Owed a Municipal Entity11-87
    • § 11:14.2 : Disclosures at Commencement of Municipal Advisory Activity11-89
      • [A] : Inadvertent Advice11-91
      • [B] : Consequences of Rendering Inadvertent Advice11-92
    • § 11:14.3 : Documentation of Municipal Advisory Relationship11-93
    • § 11:14.4 : Recommendations11-94
    • § 11:14.5 : Specific Prohibitions11-97
    • § 11:14.6 : Ban on Principal Transactions11-98
    • § 11:14.7 : The Fixed-Income Transaction Exception to the Ban on Principal Transactions11-100
  • § 11:15 : Rule G-20: Gifts, Gratuities, and Expenses of Issuance11-102
    • § 11:15.1 : General Limitation11-103
    • § 11:15.2 : Exclusions from the $100 Limit11-104
    • § 11:15.3 : Prohibition on Use of Offering Proceeds11-105
  • § 11:16 : Rule G-37: Political Contributions11-106
    • § 11:16.1 : The Two-Year Ban11-107
      • [A] : Municipal Advisors Excluding Third-Party Solicitors11-107
      • [B] : Municipal Advisor Third-Party Solicitors11-109
      • [C] : The Effect on Regulated Entity Clients of a Municipal Advisor Third-Party Solicitor Two-Year Ban11-110
      • [D] : Cross-Bans for Dealer–Municipal Advisors11-110
    • § 11:16.2 : Prohibition on Soliciting and Coordinating Contributions11-111
  • § 11:17 : Municipal Advisors Subject to Registration As Broker-Dealers; Placement Agent Activity11-112
  • Appendix 11A : Section 15B of the 1934 Act Marked to Show Dodd-Frank Act AmendmentsApp. 11A-1
  • Appendix 11B : Municipal Advisor Registration SEC Final RulesApp. 11B-1
  • Appendix 11C : Sec Glossary of Terms in Municipal Advisor Adopting ReleaseApp. 11C-1
Chapter 12: Investment Adviser Regulation
  • § 12:1 : The Intersection of Broker-Dealer, Investment Adviser, and Municipal Advisor Regulation12-2
  • § 12:2 : Overview of the Dodd-Frank Act Changes to the Advisers Act12-7
    • § 12:2.1 : Repeal of Exemption for Private Advisers12-8
    • § 12:2.2 : New Exemptions12-10
      • [A] : Private Fund Advisers12-10
      • [B] : Venture Capital Funds12-11
    • § 12:2.3 : Reallocation of SEC-State Authority12-12
  • § 12:3 : Jurisdictional Treatment of Investment Advisers and Municipal Advisors Under the 1934 Act and the Advisers Act12-14
    • § 12:3.1 : Conceptual and Definitional Overlap of Investment Advisers and Municipal Advisors12-14
    • § 12:3.2 : Investment Advisers Who Are Not Municipal Advisors; the Investment Adviser Exclusion12-17
    • § 12:3.3 : Financial Advisors Who Are Municipal Advisors but Not Investment Advisers12-20
  • § 12:4 : The SEC’s Investment Adviser Pay-to-Play Rule12-26
    • § 12:4.1 : Investment Advisers Subject to Rule 206(4)-512-28
    • § 12:4.2 : The Two-Year Ban12-29
    • § 12:4.3 : Conditional Ban on Use of Third-Party Solicitors or Placement Agents to Solicit Investment Advisory Business12-30
      • [A] : Incorporation of FINRA and MSRB Rules on Solicitors12-32
        • [A][1] : Finra12-33
        • [A][2] : Msrb12-34
      • [B] : State Law Bans: The Nationwide Reform Code Initiated by New York12-35
    • § 12:4.4 : Covered Investment Pools12-37
    • § 12:4.5 : In re TL Ventures Inc.12-39
  • § 12:5 : Restrictions on Cash Payments by Investment Advisers to Solicitors12-41
    • § 12:5.1 : Status of the Solicitor Under the Advisers Act12-42
    • § 12:5.2 : Status of Solicitor As a Municipal Advisor Under the 1934 Act12-42
  • § 12:6 : Sorting Out the Differences Among Solicitors, Placement Agents, and Pension Consultants12-43
  • § 12:7 : Investment Advisers in Public Finance12-45
    • § 12:7.1 : Advisers to Investment Vehicles for Municipal Securities12-45
      • [A] : Municipal Bond Funds12-46
      • [B] : SEC v. Heartland Advisors12-47
    • § 12:7.2 : Advisers to Government Entities12-49
      • [A] : Public Pension Funds12-49
        • [A][1] : SEC v. Henry Morris12-52
        • [A][2] : SEC v. MayfieldGentry Realty Advisors, LLC12-54
      • [B] : Local Government Investment Pools12-56
      • [C] : Is the Pool Itself an Investment Adviser?12-59
      • [D] : Section 529 College Savings Plans12-63
    • Figure 12-1 : Investment Advisers in Section 529 College Savings Plans12-64
  • § 12:8 : Registration Requirements and Exemptions12-66
    • § 12:8.1 : SEC or State Registration12-66
    • § 12:8.2 : Form Adv12-68
      • [A] : Form Adv, Part I12-68
      • [B] : Form Adv, Part 212-69
      • [C] : Updates12-70
    • § 12:8.3 : Exclusions and Exemptions12-70
      • [A] : Lawyers12-71
      • [B] : Broker-Dealers12-72
      • [C] : Vendors of Information on Municipal Securities12-73
      • [D] : Advisers of Investment in Government Securities12-75
  • § 12:9 : Fiduciary Duties of Investment Advisers12-76
    • § 12:9.1 : Duty of Loyalty: Disclosing Conflicts of Interest12-79
      • [A] : Adviser Fees: Performance, Fulcrum, and Wrap Account Fees12-79
      • [B] : In re O’Brien Partners12-82
      • [C] : Trading Practices: Allocation, Principal Transactions, Agency Cross Transactions, Personal Trading12-83
      • [D] : Reciprocal Arrangements: Soft Dollar Transactions12-88
    • § 12:9.2 : Duty of Care12-92
Chapter 13: Developments in the Municipal Securities Marketplace
  • § 13:1 : The Implementation of National Market Systems13-2
    • § 13:1.1 : The Over-the-Counter Municipal Quotation Market13-2
    • § 13:1.2 : Congressional Policy for National Market Systems13-4
    • § 13:1.3 : Development of a National Municipal Securities Market13-6
      • [A] : National Electronic Clearance and Settlement13-8
      • [B] : Online Information and Price Transparency13-10
      • [C] : Electronic Trading Centers As Liquidity Providers13-10
    • § 13:1.4 : Persistent Problems of Transparency and Liquidity in the Municipal Market13-11
  • § 13:2 : Internet Platforms for Secondary Market Trading13-12
    • § 13:2.1 : Issuer Initiatives to Promote Liquidity by Establishing Issuer Bulletin Boards13-12
      • [A] : The Exemption from Broker-Dealer Regulation for Issuers of Municipal Securities13-16
      • [B] : Effects of Disintermediation13-17
    • § 13:2.2 : Development of Alternate Trading System Regulation13-20
      • [A] : A Proprietary Trading System13-23
      • [B] : From Proprietary to Alternate Trading Systems13-26
      • [C] : Definition of an “Exchange”13-30
      • [D] : Regulation ATS13-35
    • § 13:2.3 : Online Brokerage Services and Alternate Trading Systems; Compliance with MSRB Rules13-40
      • [A] : Customer Confirmations and Other Uniform Practice Rules13-41
      • [B] : Suitability13-44
      • [C] : Time-of-Trade Disclosure13-49
      • [D] : Quotations13-51
      • [E] : Fair Pricing13-55
  • § 13:3 : Broker’s Brokers13-57
    • § 13:3.1 : Definition of a Broker’s Broker13-57
    • § 13:3.2 : “Offerings” and “Bid-Wanteds”13-58
    • § 13:3.3 : SEC and FINRA Enforcement Actions Against Broker’s Brokers for Unlawfully Conducting Bid-Wanted Auctions13-60
    • § 13:3.4 : Rule G-43; MSRB Regulation of the Conduct of Broker’s Brokers13-61
      • [A] : Background13-61
      • [B] : The General Duty of a Broker’s Broker and the Rule G-43 Safe Harbor13-62
      • [C] : Policies and Procedures13-63
      • [D] : Rule G-43 Exception for Certain Alternative Trading Systems13-65
    • § 13:3.5 : MSRB Guidance on the Conduct of Sellers and Bidders Using the Services of a Broker’s Broker13-66
      • [A] : Rule G-13; Quotation Rules Affecting Bidders13-67
      • [B] : Rule G-30; Fair Pricing Obligations of Broker-Dealers Using the Services of a Broker’s Broker13-68
Chapter 14: Fraud Concepts in Public Finance
  • § 14:1 : Introduction to Fraud Concepts in Public Finance14-3
    • § 14:1.1 : Antifraud Rules: The Centerpiece of Public Finance Securities Regulation14-3
      • [A] : The Bias in Antifraud Rules Against Private Actions and Favoring SEC Enforcement in Public Finance14-6
      • [B] : Supreme Court Decisions Favoring SEC Enforcement14-9
    • § 14:1.2 : Antifraud Rules in State Blue Sky Laws: The Extent of Federal Preemption14-14
  • § 14:2 : Antifraud Rules in Tender Offers for Municipal Securities14-22
    • § 14:2.1 : Application of SEC Tender Offer Rules to Municipal Securities14-24
    • § 14:2.2 : The Meaning of a Tender Offer14-27
    • § 14:2.3 : Fraud in Tender Offers14-30
    • § 14:2.4 : MSRB Fair Dealing Rules Applicable to Municipal Tender Offers14-31
    • § 14:2.5 : Drafting Tender Offer Disclosure14-33
  • § 14:3 : Antifraud Jurisdiction: The Reach of Rule 10b-514-35
    • § 14:3.1 : Standing: Purchaser-Seller Requirement14-35
      • [A] : Birnbaum Rule and Oral Contracts14-35
      • [B] : Municipal Bond Insurers As Purchasers or Sellers: The FSA and MBIA Cases14-39
      • [C] : Indenture Trustee’s Capacity to Act for Purchasers and Sellers of Municipal Bonds14-44
    • § 14:3.2 : The Range of Potential Defendants14-47
      • [A] : “In Connection with” As a Determining Factor14-47
      • [B] : Aiders and Abettors; Primary and Secondary Actors: From Central Bank to Enron14-54
      • [C] : Secondary Actors with Primary Liability After Stoneridge14-61
      • [D] : Bond Counsel As a Primary Actor After Stoneridge14-65
      • [E] : Aider and Abettor Liability Under State Law14-71
    • § 14:3.3 : Antifraud Jurisdiction over Swap Transactions14-74
      • [A] : Security-Based Swap Agreements14-74
      • [B] : Swap Agreements Entered into “in Connection with” the Sale of Municipal Securities14-78
  • § 14:4 : Materiality14-79
    • § 14:4.1 : Cases in Which the Materiality Element Is Not Applicable14-79
    • § 14:4.2 : The TSC Standard14-82
    • § 14:4.3 : What Is the “Total Mix” of Information?14-85
  • § 14:5 : Scienter14-89
    • § 14:5.1 : Required Mental State for Scienter14-89
    • § 14:5.2 : Pleading a Strong Inference After PSLRA14-96
    • § 14:5.3 : Pleading Competing Inferences After Tellabs14-98
  • § 14:6 : Reliance14-103
    • § 14:6.1 : Transaction Causation and Loss Causation Distinguished14-103
    • § 14:6.2 : Presumptions of Reliance14-105
      • [A] : Material Omissions14-107
      • [B] : Misstatements in an Efficient Market14-110
      • [C] : Misstatements in the Public Finance Market14-114
      • [D] : The Theory That Fraud Created the Market14-116
  • § 14:7 : Loss Causation14-123
    • § 14:7.1 : Common Law and PSLRA14-123
    • § 14:7.2 : Loss Causation After Dura Pharmaceuticals14-124
      • [A] : Fraud-on-the-Market Theory14-125
      • [B] : Materialization-of-Risk Standard14-126
  • § 14:8 : Disclosure Fraud: The Issuer’s Duty to Provide Disclosure14-127
    • § 14:8.1 : Active and Passive Issuers14-130
  • § 14:9 : Transaction Fraud: Redemptions and Escrow Restructurings14-138
    • § 14:9.1 : The Institutional Investors’ Obligations14-150
  • § 14:10 : Concealment Fraud: Insider Trading14-157
  • § 14:11 : Fiduciary Fraud; Market Integrity14-161
    • § 14:11.1 : The Public Finance Participants14-163
    • § 14:11.2 : Duty to Speak in a Nondisclosure Case14-168
    • § 14:11.3 : Determining Whether a Participant Is a Fiduciary14-172
      • [A] : Property Theory14-173
      • [B] : Reliance Theory14-175
      • [C] : Contract Theory14-175
      • [C] : Contract Theory14-175
      • [D] : Transfer of Encumbered Power Theory14-178
    • § 14:11.4 : Government Officials As Fiduciaries14-179
    • § 14:11.5 : Underwriters of Municipal Securities14-182
      • [A] : United States v. Cochran: Cochran 114-184
      • [B] : SEC v. Cochran: Cochran 214-186
      • [C] : SEC v. Terry D. Busbee & Preston C. Bynum14-188
    • § 14:11.6 : Brokers and Dealers14-190
    • § 14:11.7 : Half-Truths and Misleading Nondisclosures14-194
    • § 14:11.8 : Nonfiduciary Obligations Among Participants14-197
  • § 14:12 : Markup Fraud: Yield Burning14-199
    • § 14:12.1 : The Fair Market Value Rule Under the Arbitrage Regulations14-203
    • § 14:12.2 : Misrepresentations in Fair Market Value Certificates14-205
    • § 14:12.3 : The Dealer’s Duty to Disclose Markups14-209
      • [A] : Excessive Markups14-209
      • [B] : Fiduciary Relationship14-214
      • [C] : Global Resolution14-217
Chapter 15: SEC Enforcement Powers and Criminal Violations
  • § 15:1 : SEC Division of Enforcement15-2
  • § 15:2 : SEC Enforcement Powers Against States and Political Subdivisions15-6
  • § 15:3 : SEC Enforcement Powers Against Public Officials15-10
    • § 15:3.1 : Executive Branch15-10
    • § 15:3.2 : Legislative Branch15-10
    • § 15:3.3 : Reliance on Advisors15-14
    • § 15:3.4 : Immunity of Public Officials15-17
  • § 15:4 : New SEC Enforcement Powers Under the Dodd-Frank Act15-20
    • § 15:4.1 : Aiders and Abettors15-20
    • § 15:4.2 : Market Manipulation15-21
    • § 15:4.3 : New Monetary Penalties in Cease-and-Desist Proceedings15-22
    • § 15:4.4 : Whistleblower Incentives15-23
  • § 15:5 : Informal and Formal Investigations15-25
    • § 15:5.1 : In General15-25
    • § 15:5.2 : Wells Submissions15-28
    • § 15:5.3 : Staff Enforcement Recommendations15-30
  • § 15:6 : Section 21(a) Reports of Investigations15-31
    • § 15:6.1 : The Importance of Section 21(a) Reports in Public Finance15-31
    • § 15:6.2 : Controversial and Timely Legal Issues15-33
    • § 15:6.3 : The Section 21(a) Seaboard Report Initiative to Foster Cooperation15-34
  • § 15:7 : Municipal Entity Policies, Procedures, and Internal Controls Responsive to SEC Initiatives to Foster Cooperation15-36
  • § 15:8 : SEC Enforcement Actions15-37
    • § 15:8.1 : Disciplinary Actions Against Regulated Entities, Including Municipal Advisors15-37
    • § 15:8.2 : The Importance of Cease-and-Desist Orders in Public Finance15-40
      • [A] : Cease-and-Desist Orders to Improve Issuer Disclosure: Pension Fund Liability15-44
      • [B] : Cease-and-Desist Orders to Improve Market Integrity: Bid Rigging15-46
    • § 15:8.3 : The SEC’s Choice to Seek an Injunction or a Cease-and-Desist Order15-48
      • [A] : Features of an Injunctive Action15-49
      • [B] : Factors Influencing the Choice Between an Injunctive Action and a Cease-and-Desist Proceeding15-50
      • [C] : Purchase or Sale of Securities in Market Integrity Enforcement Actions15-53
      • [D] : Use of an Injunction and a Cease-and-Desist Order for Different Parties in the Same Case: Jefferson County, Alabama15-66
      • [E] : Monetary and Equitable Remedies in Enforcement Actions15-69
  • § 15:9 : Criminal Referrals to the Justice Department and Parallel Proceedings15-73
    • § 15:9.1 : Criminal Conduct Under Securities Laws15-74
    • § 15:9.2 : Willful Violation of MSRB Rules15-76
    • § 15:9.3 : Civil and Criminal Contempt15-78
  • § 15:10 : Other Criminal Statutes Applicable in Public Finance Securities Transactions15-78
    • § 15:10.1 : Conspiracy15-79
      • [A] : Jefferson County, Alabama15-80
      • [B] : Antitrust Conspiracy in Nationwide Bid-Rigging Probe15-82
    • § 15:10.2 : Mail Fraud and Wire Fraud, § 1341 and § 134315-83
      • [A] : Intangible Right to Honest Services, § 134615-87
        • [A][1] : Public Sector Cases15-92
        • [A][2] : Private Sector Cases15-93
      • [B] : Skilling v. United States15-95
        • [B][1] : Public Sector Cases in Light of Skilling: Jefferson County15-96
        • [B][2] : Private Sector Cases in Light of Skilling: GIC Brokers and Providers; Underwriters and Municipal Advisors15-98
    • § 15:10.3 : Money Laundering15-101
    • § 15:10.4 : Bribery and Extortion15-101
      • [A] : Quid Pro Quo15-107
      • [B] : Under Color of Official Right15-110
      • [C] : Philadelphia15-113
Chapter 16: The Sovereign Immunity Defense
  • § 16:1 : Introduction to Sovereign Immunity Issues in the Securities Law of Public Finance16-2
    • § 16:1.1 : Rule 10b-5 Civil Actions Against States16-3
    • § 16:1.2 : Sources of the Conventional View of State Sovereign Immunity16-7
    • § 16:1.3 : A Public Policy Case for the Conventional View When Applied to the Issuance of Municipal Securities by States16-10
  • § 16:2 : Federal Court Diversity and Subject Matter Jurisdiction16-12
    • § 16:2.1 : Sovereign Immunity as a Limitation on Judicial Power16-12
      • [A] : The Eleventh Amendment and Diversity Jurisdiction16-13
      • [B] : The Nineteenth-Century Contract Clause Bondholder Litigation16-16
    • § 16:2.2 : Congressional Power to Abrogate Sovereign Immunity16-19
      • [A] : Article I, Section 8 Commerce Clause Power Before 199616-19
      • [B] : Article I, Section 8 Commerce Clause Power After 199616-22
      • [C] : Article I, Section 8 Bankruptcy Clause Power16-25
      • [D] : Fourteenth Amendment, Section 5 Power16-27
    • § 16:2.3 : State Consent to Waive Sovereign Immunity16-33
      • [A] : Constructive Waiver by Activity16-33
      • [B] : Plan-of-Constitution Waiver16-38
    • § 16:2.4 : Application of Cases to State Issues of Securities16-39
    • § 16:2.5 : Appellate Jurisdiction: Forum Shifting16-42
    • § 16:2.6 : SEC Administrative Actions16-47
    • § 16:2.7 : State Court Actions16-49
  • § 16:3 : Separating the Public Body of the State from Private/Public Officials of the State16-50
    • § 16:3.1 : Historical Background16-50
    • § 16:3.2 : Suits against Public Officials; Ex Parte Young Prospective Relief16-57
    • § 16:3.3 : Immunity of Public Officials: The Business Judgment Rule in Public Finance16-60
    • § 16:3.4 : Controlling Persons16-69
  • § 16:4 : Separating the State from Non-Sovereign Political Subdivisions16-73
    • § 16:4.1 : The Body Politic and Corporate16-74
    • § 16:4.2 : State Authorities16-76
    • § 16:4.3 : Interstate Compacts16-81
    • § 16:4.4 : Public Universities and Hospitals16-84
  • § 16:5 : Indian Tribal Governments16-87
  Table of Authorities
  Index

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