[movermike] movermike: Wells Notices Received

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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)