The California Legislature last week approved a securities fraud bill outlawing the sale of fractionalized interests in a state municipal lease obligation without the written consent of the municipality.

Gov. Pete Wilson is expected to sign the bill into law.

The bill, which has the backing of all the state's top financial officers, was sponsored by Los Angeles County. The county alleged that in recent years securities firms were trying to market the county's vendor lease obligations as certificates of participation without the county's knowledge.

In a recent endorsement of the bill, the California Debt Advisor,, Commission noted that it should "help curb abuses" involving unwanted lease sales. But because the bill only extends to sales and firms operating within California, it cannot prevent all such sales, the commission said.

"Consequently, it does not relieve agencies from the responsibility of specifying in their lease documents the conditions under which the secondary securitization of leases will be permitted," the commission said, adding that "agencies should pay particular attention to disclosure and notification requirements."

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