LOS ANGELES -- The Securities and Exchange Commission has asked officials of Alameda County, Calif., to provide documents relating to bond issuance and political contributions, according to SEC and county documents obtained last week by The Bond Buyer.
Among areas being studied by the SEC is the county's relationship with the underwriting firm of Grigsby Brandford & Co., county sources said.
Grigsby Brandford officials did not return four phone calls asking for comment by midday Friday.
In a brief telephone interview late Thursday, county administrator Steven C. Szalay said the county is complying fully with the SEC's request for information.
"That is all I can say," he said, adding that he has no idea what the purpose of the probe is "because they don't say."
"I'm not going to talk about it at all," Szalay said. "They asked for some confidential information. We searched the files with the attorneys, got the information, and that is all there is to it."
County counsel Kelvin H. Booty Jr., speaking through his office manager, said his only statement was "no comment."
However, the nature of the SEC investigation was implied by a memo that Booty wrote to supervisors Aug. 8. The memo, obtained by The Bond Buyer, said that the county "has on retainer the law firm of Remcho, Johansen & Purcell, experts in political law questions. You should also feel free to contact those attorneys."
Robin Johansen, a partner in the San Francisco-based firm, did not return two phone calls.
"Please note that the SEC inquiry is confidential, and that it is stated that the fact of the inquiry should not be construed as an allegation of anything illegal or improper," Booty's memo said.
"I share that opinion," Booty wrote. "I am aware of nothing illegal or improper in connection with any of our financial transactions."
Reached for comment, Robert Singletary, enforcement chief for the SEC for its San Francisco district office, said last Thursday that the SEC can neither confirm nor deny that the agency is conducting an investigation in Alameda County.
However, SEC policymakers have indicated a willingness to check into reports of political influence peddling and questionable campaign contributions around the country. The SEC said last April that it intends to closely monitor municipal bond firms' compliance with the new Rule G-37 curbing "pay to play" political contributions.
Apparently at the heart of the SEC investigation in Alameda County is the local government's dealings with Grigsby Brandford, the prominent San Francisco-based minority-owned underwriting firm that has worked on three financings for the county since 1989.
In January, supervisors voted, 3 to to select Grigsby Brandford to be senior managing underwriter for a proposed taxable pension obligation bond financing that subsequently has been delayed. The vote went against a recommendation by county staff members to pursue a request-for-proposals approach.
According to two county sources, the three supervisors who voted to award the project to Grigsby Brandford had received contributions from the firm or its principals. Of the two supervisors who voted against the contract, one had received a contribution and the other hand.
Following the vote, Marian Breitbart, a county administrative analyst who worked on county financings, handed in her resignation along with a four-page letter complaining that supervisors violated their own policy for the selection of underwriters. The policy, established last October, says that with some exceptions such as "time-sensitive issues," the county will seek bids from underwriters before awarding contracts.
"I couldn't believe it when they passed it," supervisor Gail Steele said on Friday, referring to the three supervisors who voted to award the Grigsby Brandford contract. "I don't know why they did it. I have never understood it."
Steele and supervisor Ed Campbell cast the nay votes on the award of the Grigsby Brandford contract. Steele said that she has never received a contribution from the firm, while Campbell has said he did receive one.
The controversial contract award to Grigsby Brandford prompted the Alameda County grand jury to look into the matter. In its annual June report, the jury recommended that supervisors not accept political contributions "from any individual or company" that bids for county business.
In mid-July, the SEC contacted county officials for the first time, according to county and SEC documents.
Booty, the county's top lawyer, and Gary Lloyd, SEC San Francisco district trial counsel, have corresponded with each other several times, the documents showed.
In a memo written by Booty to supervisors last Thursday, Booty said he was contacted by Lloyd asking whether he or county administrator Szalay "had discussed political contributions with any of you, and, if not, asking for your names and addresses."
"Since we had no discussions, I am sending the attorney the names and addresses" of board members who served since Jan. 1, 1990, Booty wrote.
In an earlier memo written Aug. 8, Booty told supervisors that the SEC requested documents relating "to all the county's financing transactions" since 1990, including certificates of participation, tax and revenue anticipation notes, and industrial development bonds.
Booty told supervisors that he assembled "most of the documents" requested by the SEC. They "consist primarily of preliminary official statements, final official statements, and transmittal letters," he wrote.
"I have reviewed seven boxes of material in the county administrator's office to produce" the requested materials, Booty wrote.
In the memo, Booty told supervisors that he was asked to provide the SEC with documents "concerning any political campaign contribution, payment of money, or transfer of anything of value" between the county and any other individuals.
"Neither Steve [Szalay] nor I know of any such documents, and I have so indicated" in a letter Booty said he sent to the SEC.
Booty wrote, "Since your political campaign contributions are matters of public record on file with the [county] registrar of voters, it seems to me that the SEC could simply review those records if that is the real point of this inquiry."
Meanwhile, Booty wrote the SEC's Lloyd that the supervisors are still contemplating issuing the pension obligation bonds that touched off the controversy.
"No bonds have as yet been issued: a validation action is still pending" in Alameda County Superior Court, a Booty letter to Lloyd on Aug. 4 said. "Should that action be resolved in the county's favor, the board of supervisors may decided to proceed with that issuance," Booty wrote.
But supervisor Steele said the pension obligation bond financing "got blown" by the controversy surrounding it and she does not believe it will take place.
The county last issued long-term obligations in March 1993 -- a $169.95 million issue of refunding certificates of participation for the Santa Rita jail project. The issue's bookrunning manager was Grigsby Brandford. Grigsby Brandford was bookrunning manager when the Santa Rita new-money bonds were first issued in 1989.
The county also issued $110 million of tax and revenue anticipation notes on July 14 as part of an annual cash-flow management borrowing. Three firms served as co-managers on the Tran issue: Pryor, McClendon, Counts & Co.; Charles A. Bell Securities Corp.; and Henderson Capital Partners Inc.
Both Pryor McClendon and Bell Securities are minority-owned firms, and Henderson Capital is a woman-owned firm.
