DENVER -- Despite new media attention on the matter, a Denver official denied this week that the Securities and Exchange Commission is widening its investigation of Denver's ties to its former financial adviser, Mark S. Ferber.
Assistant city attorney Lee Marable confirmed Wednesday that his office received a second request for documents from the SEC in March after an initial request in January. He said the March request, made by the SEC's Washington office, was for documents describing Denver's selection process for investment advisers and underwriters.
In January, Denver sent records to the Boston office of the U.S. Justice Department and the SEC's Boston office as part of the national investigation of Ferber's activities. The offices had requested documents about interest swaps, said Denver assistant city attorney Karen Aviles.
Earlier this week the Washington Post and several other media outlets reported that the SEC was investigating Denver and had subpoenaed documents relating to the city's airport financings.
Beginning in the spring of 1993, Ferber was the subject of several investigations into allegations of an undisclosed fee-splitting relationship he had with Merrill Lynch & Co. No formal actions have been taken and the parties involved have denied any wrongdoing.
While at Lazard Freres & Co., Ferber and his associates served as financial adviser to the city of Denver when it issued more than $3 billion of debt to build Denver International Airport. Ferber later worked for First Albany, before being fired when the conflict of interest allegations surfaced. One of his former associates, Kenneth Gibbs, remains financial adviser to Denver.
The SEC has contacted dozens of municipal issuers as part of the Ferber investigation, sources and published reports said.
Marable, the assistant city attorney, described the March request for records as "routine" and said he does not believe the SEC has widened its probe past the parameters already set in the Ferber case.
Voluntary follow-up interviews with the city's revenue manager, Mayor Wellington Webb, and two members of the city's council's bond selection committee occurred sometime in the spring, Marable said.
The SEC has acknowledged it is looking into the municipal bond business and political contributions, but the agency has not shed light on whether there is a separate investigation into the Ferber case.
"This is looked on as a national investigation," Marable said. "I disagree. I think the probe is still focused on interest rate swaps in 1991. But it was only prudent to look at the larger selection process picture." He added that Denver "did zero swaps."
Marable said the Washington Post story this week about the SEC subpoenas in Denver was the result of political maneuvering involving U.S. Transportation Secretary Federico Pena, who was responsible for building Denver International Airport when he was mayor of Denver.
"As the story starts to unfold, it will become quite clear the story is politics out of Washington. The issue will die down. A lot of people are reading more into this than it deserves," Marable said.
For the last four years, Denver mayors, first Pena and then Webb, have been the subject of exhaustive coverage about bond firms gaining business on Denver International after making donations to the campaigns of both men.
It has been documented and acknowledged by the campaigns that Pryor, McClendon, Counts & Co. of Philadelphia donated $30,000 to the Webb campaign over several years and in 1992 was named to the city's underwriting team leadership.
In addition, the campaigns acknowledge that Lehman Brothers and other major bond firms who underwrote the Denver deal donated a total of $66,000 to Webb's campaign and nearly $14,000 to Pena's campaign.
Both mayoral regimes have denied any favoritism. Denver investment bankers shrug when asked about such donations, pointing out that nearly every investment firm gave money to Denver politicians in the early 1990s.
As part of the SEC investigation earlier this year, Denver bankers were asked by the SEC to list their political donations, investment banking sources said.
The SEC's assistant director of enforcement, Gary Sundick, acknowledged the agency is conducting a national investigation of political contributions in the bond industry. But he would not say if it was part of the Ferber inquiry.
"What has been said by the commission in speeches and elsewhere is the commission has a number of investigations underway nationwide. some in Washington, some in other regions, which generally involve selection of underwriters [and the] relation, if any, of political contributions to the underwriting selection process," Sundick said.
Patrick M. Fitzgibbons contributed to this article.
