CHICAGO - Aiming to diminish the perception of political influence on county bond deals, the Cook County, Ill., Board of Commissioners this week approved a regulation that requires underwriters and bond attorneys to submit formal proposals for bond work.

The regulation also requires underwriters to comply with all limitations or disclosure requirements concerning political contributions that are or may be imposed by the Municipal Securities Rulemaking Board or the Securities and Exchange Commission.

Violators of the county provision could be barred by the county's chief financial official from participation in county bond deals for two years.

The MSRB has approved a rule that, among other things, would bar dealers who make contributions to politicians from doing business for two years with issuers served by those officials. The MSRB this week said it will meet Monday to consider tightening the disclosure provisions in the rule, which is expected to go to the SEC next month for review and public comment.

Under the Cook County regulation, the county's chief financial officer will conduct a request for proposals for underwriters on the county's negotiated sales. A request for qualifications for bond counsel firms also will be conducted at least once every two years for the county's negotiated and competitive bond deals

David Carvalho, special assistant to Cook County Board President Richard Phelan, said that the regulation "formalizes" a selection process that the county has used since Phelan became president of the board in 1990.

According to the regulation, underwriters will be required to list the firm's experience in issuing bonds, financial strength, proportion of minority or female ownership, and written policies on sexual harassment.

Underwriters also will be required to give information regarding specific transactions listed in the request for proposals, including proposed fees or case examples of similar financings, the regulation says.

The board president will select senior managers and co-managers upon recommendation of the chief financial officer. The president's selection then will need board approval. Selection will be based on firms' overall quality, with consideration given to minority and female ownership, written policies on sexual harassment, Cook County corporate residence, and corporate investment in Cook County, the regulation says.

In addition, the president and chief financial officer can consider other criteria, including a firm's applicable skills needed for each transaction and past performance on county issues, the regulation says.

To select the bond counsel for a single bond sale or multiple bond sales, whether negotiated or competitively bid, the president must select a firm or firms from three or more choices on a qualified list based on recommendations from the chief financial officer. The president's choice must then be approved by the board.

The chief financial officer begins the bond counsel selection process by asking each firm under consideration to submit its fees for anticipated work. The bond firms will be chosen based on criteria similar to the ones in effect for underwriters.

Though the county regulation does not ban political contributions, deferring instead to the proposed MSRB guidelines, an ethics ordinance places limits on campaign contributions from contractors working with the county, including bond firms.

Under the ordinance, which the county board passed in August, county officials can receive no more than $1,500 from any firm that seeks to do business with the county or that currently has a contract with the county. In an election year, the limit will be raised to $3,000. Individuals within a firm will be subject to separate $1,500 and $3,000 limits.

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