[movermike] movermike: Wells Notices Received
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Sat Feb 9 12:31:18 EST 2008
Posted by movermike:
Wells Notices Received
http://www.movermike.com/posts/1202578261.shtml
[1]Dexia SA DEXI.BR (Brussels) and Bank of America Corp (BAC) received
a Wells Notice from the SEC following a probe of municipal guaranteed
investment contracts (GICs). The Wells Notice indicates that the SEC
staff intends to recommend filing civil charges against the companies
but also gives each time to respond.
Both companies were among about 30 firms subpoenaed in November
2006 in a federal price-fixing probe related to the bidding of
guaranteed investment contracts, which state and local governments
use to park proceeds of municipal bond sales.
[...]
The SEC, the Internal Revenue Service and the U.S. Justice
Department in November 2006 started an industry-wide investigation
of how municipal bond proceeds are invested.
As I understand these things, when a bond is floated the money has to
be put somewhere until it's used for the municipal purpose. Reserves
and other funds are set up to make sure that the bondholders get paid.
Sometimes the money isn't used. Bloomberg notes a [2]CDR Financial
that
...had a secret agreement with the provider of a guaranteed
investment contract for bonds issued in 1999 by an authority in
Gulf Breeze, Florida, The deal allowed CDR to increase its fees if
none of $220 million in bond proceeds was used for its intended
purpose -- affordable housing.
[3]Wells Notice [4]Dexia SA DEXI.BR [5]Bank of America Corp (BAC)
References
1. http://www.reuters.com/article/companyNews/idUSN0846678620080208
2. http://www.bloomberg.com/apps/news?pid=20601087&sid=atxiuVYLizzw&refer=home
3. http://technorati.com/tag/Wells+Notice
4. http://technorati.com/tag/Dexia+SA+DEXI.BR
5. http://technorati.com/tag/Bank+of+America+Corp+(BAC)
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