CHICAGO -- The National Association of Independent Public Finance Advisors has adopted a policy discouraging its members from making political contributions to get or retain business.
The policy was unanimously adopted at the group's annual meeting Sept. 11 in Oak Brook, Ill., according to Robert C. Bendzinski, the group's new president.
Bendzinski, who is also president and chief executive officer of Detroit-based Bendzinski & Co. Municipal Finance Advisors, said Friday the policy was the culmination of at least 16 months of discussions among officials at the group's 13 member firms.
"We all believe that financial advisers, underwriters, and other professionals that provide issuer services should be retained for their expertise or specialties and not for political reasons, and not because they made political contributions," he said.
The policy states that the association "discourages its members, either as firms or as individuals, from the making of political contributions in the anticipation of obtaining or retaining business."
Lora Stovall, a principal at Bartle Wells Associates in San Francisco and a director of the association, said that many of the members already have internal policies prohibiting campaign contributions.
Bendzinski said the group chose to adopt the policy in light of the fact that industry regulators, including the Municipal Securities Rulemaking Board, are in the process of formulating contributions rules.
The municipal securities industry has been under the gun from federal regulators and lawmakers to clean up its act on campaign contributions ever since a federal probe was launched into New Jersey's bond business this spring.
Since then, a number of other scandals related to the business and campaign contributions have been uncovered across the nation.
Earlier this month, Rep. Edward Markey, D-Mass., held hearings on the subject, taking testimony from a variety of professionals on the issues of campaign contributions, the bond business, secondary market disclosure, and how to regulate and control these activities. Markey is chairman of the House Energy and Commerce Committee's subcommitte on telecommunications and finance.
The MSRB has proposed that bond dealers be barred from making political contributions to issuers for the purpose of obtaining or retaining municipal securities business. Other contributions made by dealers would have to be disclosed to the MSRB, which [ILLEGIBLE WORDS] formation Library.
Bendzinski said the association's members, independent firms that act solely as advisers and not as underwriters, do not fall under the jurisdiction of the MSRB.
The Public Securities Association has commented that the MSRB proposal would not cover independent financial advisers, bond attorneys, and others. The PSA has stated that the Securities and Exchange Commission should promulgate regulations requiring issuers to disclose contributions from all parties to a bond issue, including advisers.
Freda Johnson, president of Government Finance Associates Inc. in New York City and a director of the association, said with the adoption of the association's policy, the group wanted "to send a message to the industry" that it supports the MSRB rule and that it would abide by it "in spirit."
The independent finance advisers' association also commented on the MSRB's proposal in Sept. 17 letter from Bendzinski. The letter calls for reporting all contributions by dealers whether or not the dealer "is actually awarded the business."
Stovall, who was a member of the association's committee that formulated the letter, said the group is calling for "full disclosure' because "determining intent is probably imposible."
At its annual meeting, the five-year-old association elected Bendzinski to a one-year term as president.
Johnson was elected to the board of directors representing members in the eastern time zone, while Lawrence G. Rolapp, a pricipal at Fieldman, Rolapp & Associates, was elected for the western time zone. Seegar Swanson Jr., chief executive officer of Ehlers & Associates, was elected for the Midwest region.
Stovall was elected a director at large, and Robert D. Pulscher, chief executive officer of Springsted Inc., [ILLEGIBLE WORDS] past president of the group.
