WASHINGTON -- An attorney for Alabama bond dealer William Blount said yesterday that his client's statement Friday that he will not report his political contributions for the last three months to the Municipal Securities Rulemaking Board was a "misunderstanding."
"Bill Blount will comply with the disclosure rule," said Charles M. Elmer, an attorney with Leitman, Siegal, Payne & Campbell in Birmingham, Ala., which is one of two law firms representing Blount.
Elmer was referring to a statement that Blount made in a telephone interview Friday that was published in The Bond Buyer. Blount said that he does not have to file a quarterly report until the U.S. Court of Appeals for the District of Columbia has ruled in Blount v SEC, the lawsuit Blount filed April 26 that challenges the constitutionality of the MSRB's "pay-to-play" Rule G-37.
Rule G-37 bars municipal bond dealers that make contributions to issuer clients from doing business for two years with those governments. But individual employees can still give up to $250 to candidates running for office in the jurisdiction where the employees live, and those contributions do not need to be reported to the MSRB.
The quarterly reports were due at the MSRB for the first time ever July 31 and cover the period of April 25, when the rule first took effect, through July 31.
Blount won an emergency stay recently from the Appeals Court of a key provision in Rule G-37 that bars dealers from soliciting contributions on behalf of a state or local government official. But the court did not exempt him from the rule's centerpiece provision, which bans business for two years if a municipal dealer or a bond employee has given a contribution.
Blount said in Friday's telephone interview that since he is challenging the constitutionality of the entire rule, not just parts, he does not have to file a quarterly report until the Appeals Court has ruled.
But Christopher Taylor, MSRB executive director, said in an interview later on Friday that Blount's view is "incorrect." Blount is subject to those rules that are not stayed by the courts; therefore, "we would expect a filing on his part," Taylor said.
Meanwhile, a sampling of the reports filed to meet the July 31 deadline continue to show that most firms and their underwriting staffs are abstaining from making contributions.
Most major firms that have filed reports said their employees made no contributions that must be reported in the quarter. The firms include Goldman, Sacs & Co.; Merrill Lynch & Co.; Kidder Peabody & Co.; and CS First Boston.
Dean Witter Reynolds Inc. said two executives made contributions totaling $1,500 to two candidates: Richard Mahoney, the Arizona secretary of state, and a committee representing Massachusetts Coy. William Weld.
Lehman Brothers said its political action committee gave $2,000 to the Nebraska Democratic Party federal account.
Benedict T. Marino, managing director of the public finance division of Donaldson, Lufkin & Jenrette Securities COrp., was not available for comment on contributions reported by the firm.
The firm said that two municipal professionals gave a total of $890 to officials or entities in Illinois and New York State during the quarter.
One $250 contribution was to the Addison Township, Ill., Republican Organization, which would not be covered by the rule unless the organization is being used as a conduit for a single official.
Contributions totaling $340 were given to candidates for three local offices in Illinois, and $300 was given to one Republican candidate for governor in New York.
Firstar Bank Milwaukee, which was financial adviser, placement agent, or underwriter in 12 deals in Illinois and Wisconsin in the quarter, reported no contributions by employees.
But the bank said it will file an amended report by Aug. 26 because one municipal finance professional has not reported the information. The firm, which stressed that it has established procedures to collect information from employees, said it is "reviewing its options with respect to the professional with legal counsel."
Geoffrey G. Maclay Jr., first vice president of Firstar, who filed the bank's report, said in a telephone interview that it boils down to a philosophical debate. "I do not know if the individual contributed or not. The individual expressed philosophical concerns about the intent of G-37 as it relates to personal convictions. The purpose of the delay is to clarify G-37 in view of the individual's concerns," he said.
Pryor, McClendon, Counts & Co., whose president Raymond J. McClendon has raised questions publicly about the constitutionality of Rule G-37, reported that one employee gave $250 in Kansas to the Flattery for Governor campaign.
Wheat First Butcher Singer in Philadelphia reported contributions totaling $21,200. E Willson Craigie, the firm's senior vice president, gave $600 to the Republican Party of Virginia and Walter Craigie, managing director, gave $500.
Wheat First's political action committee gave a total of $7,850 to Republican committees in Pennsylvania. And the dealer gave corporate contributions totaling. $12,250 to Republican, and DemOcratic state and county committees or caucuses.
First Commercial, Investments, Inc. of Little Rock, Ark., reported that James R. Cobb, chairman of the board, gave $300 to Sharon Priest, a Democratic candidate for Arkansas secretary of state. The firm reported not negotiated underwritings or financial advisory services for the quarter.
Bank IV Kansas reported $1,250 in contributions to candidates for two state offices and two federal offices.
One employee gave $250 to Jim Slatterly, candidate for governor, and one employee gave $500 to Bill Graves, Kansas secretary of state, who is running for governor. One employee gave $250 to incumbent Pat Roberts, who is running for Congress. The firm was financing agent for Lawrence, Kan., hospital revenue bonds.