The District of Columbia has issued COPs, but it doesn't want to be a cop.
"We don't want to be the cops for any particular firm up on Wall Street," said Ellen M. O'Connor, deputy mayor for finance. "It's hard enough to worry about the budget of the District of Columbia, the cash of the District of Columbia, the taxes of the District of Columbia, the economy of the District of Columbia."
The city does not require investment banking firms to disclose the financial relationships they have with other firms or lobbyists hired to help get government business.
O'Connor said that is not likely to change, even though the city is reviewing its ties with its financial adviser, Lazard Freres & Co. The review was sparked by a similar inquiry in Massachusetts, which does have a disclosure requirement. Massachusetts took action after a previously undisclosed fee-splitting arrangement between Lazard Freres and Merrill Lynch & Co. came to light.
"I know people depend on us to know the rules, observe the rules, and do it right," O'Connor said. "I want to depend on the firms on Wall Street, that they know their business and they practice it and they are therefore to be relied on."
O'Connor has said that the city was aware that Lazard Freres and Merrill Lynch had an arrangement. But when Lazard outlined how fees had been structured in other municipalities, the district explicitly rejected the idea of paying Lazard a separate fee. Instead, the district stuck by the terms of its contract with Lazard, under which the firm receives a flat annual fee of $500,000.
O'Connor said the current investigation, which is expected to conclude by the middle of the month, is simply to verify that the contract was observed.
