In a first, treasurers stand together to pass resolutions for better disclosure.

NEW ORLEANS -- The National Association of State Treasurers approved a raft of resolutions yesterday designed to improve the disclosure between municipal bond firms and issuers of state debt.

The resolutions, approved at the group's annual meeting here, address issues raised by several scandals that have hit the municipal bond industry over the past two years.

The resolutions mark the first time treasurers have spoken with one voice about the state of the municipal industry. They also mark the beginning of a coordinated effort to improve disclosure, ethical standards, and campaign finance practices.

The resolutions include a requirement that financial professionals make full disclosure of all relationships by firms and between firms.

Firms will be required, under the terms of the resolution, to disclose to state treasurers any fee-splitting arrangements or joint accounts they share with other firms.

"It is time for everyone in the underwriting process to play by the same rules," said Missouri Treasurer Robert Holden. Holden led the group's secondary markets and ethics subcommittee, which recommended the resolutions. "The public and private sectors both need to bring fee splitting and other back door relationships into the open."

Fee splitting was an issue raised in the ongoing investigation of the relationship between former investment banker and financial adviser Mark S. Ferber and Merrill Lynch & Co.

Under the approved resolutions, treasurers will permit such joint arrangements only in cases where they have specifically given approval.

One of the resolutions will also require firms to disclose the names of any persons, including attorneys, lobbyists, or public relations professionals, "engaged to promote the selection of the particular financial entities."

Failure to comply with all of the guidelines of this resolution will be grounds for immediate dismissal, disqualification from future financings, or other penalties established by the state, including fines.

As the treasurers readied themselves to vote, Rhode Island Treasurer Nancy Mayer recommended that they take the provisions of the resolution a step further.

"It should be our responsibility to take to our individual state legislatures laws spelling out specific penalties for firms that fail to comply," Mayer said.

Holden agreed that the resolution was a starting point and said that he will be meeting with the leadership of the state treasurers group to send a letter to both the Municipal Securities Rulemaking Board and the Securities and Exchange Commission. The letter will ask the regulators to conduct their investigations and policy-making processes in a more open fashion with the treasurers.

Louisiana Treasurer Mary L. Landrieu said that firms failing to comply would probably be banned from participating in Louisiana financings.

"We want to make sure that we know all the players in the teams that we are dealing with," Landrieu said.

Landrieu's office last year went on the attack after learning that First Boston Corp. and Lazard Freres & Co. were forced to turn over half their fees on a Louisiana bond deal to a politically connected underwriter that did no work on the transaction.

Utah Treasurer Edward T. Alter said the resolutions passed by the treasurers group might encourage states to choose more competitively bid bond sales.

The treasurers also unanimously approved yesterday a resolution on campaign finance reform that broadened the amount of disclosure contributors must make. It requires treasurers to disclose contributors' names, addresses, occupations, and employers when making any contribution of $100 or more.

A separate resolution was also unanimously approved dealing with treasurers' standards of conduct.

This resolution states that treasurers will conduct themselves under the letter of the law at all times, will not use any confidential information for their own benefit, will fulfill the public trust in all ways -- including in campaign finance -- and will make the protection of public funds and the state's credit rating a paramount concern.

Treasurers also approved resolutions:

* Supporting the findings of a joint consortium between the state treasurers' group and the SEC on needed improvements in secondary market disclosure.

* Supporting President Clinton's decision to abandon his proposed tax on state-run gaming facilities.

* Opposing the charging of excessive deposit item return fees by financial institutions.

* Calling for the federal government to take great care in consolidating federal bank regulatory agencies.

* Calling for the U.S. Congress to enact major campaign reform for all federal, state, and local officials.

* Supporting legislation that will provide for the tax-free treatment of qualified state education savings accounts.

* Supporting Connecticut Sen. Joseph Lieberman's legislation dealing with electronic transfer of government benefits.

* Urging the Congress, the SEC, and the MSRB to honor the protections to state and local government issuers afforded by the Tower Amendment.

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