ATLANTA -- The Florida Association of Counties last week distributed a sample letter calling for a boycott of 17 large securities firms for backing a proposed ban on political contributions, an official with the association said yesterday.
Carol Roberts, the association's third vice president, said that last week the counties group also adopted a strongly worded resolution opposing the proposed rule, which was tentatively adopted by the Municipal Securities Rulemaking Board in November.
Under the MSRB curb, a bond dealer could give a local official a political contribution, but the firm would have to wait two years before doing business with the issuer that the official serves. The proposal needs approval by the Securities and Exchange Commission.
Roberts said the association members approved the resolution and received copies of the sample letter last Thursday, during their annual legislative conference in Tallahassee.
"I proposed the resolution and drafted the sample letter because I am sick and tired of the invasion of our constitutional rights planned by the MSRB," said Roberts, who is also a commissioner representing Palm Beach County on Florida's southeast coast.
"But I also felt that the big Wall Street firms that have given such strong support to this whole thing should be singled out," she said.
The sample letter asserts that the sender is recommending that his or her county not give bond business to any of the 17 firms. Instead of employing these firms, the sender's county commission will be urged to hire regional, minority and women-owned firms, the letter says.
"As an action item, I am proposing that our county board do not award any senior managed issues to any of the Wall Street 17, who have or are endorsing such public policy damaging rules," the sample letter reads. "I am further proposing that the lead go to qualified region, minority, and women-owned securities firms, since it is obvious that under these new rules, they will be the firms sensitive to our community."
The letter also expresses outrage at what it calls the "the premise that political contributions provide a basis or have a direct relationship in the selection of securities firms that participate in transactions in which I play a fiduciary role.
"In addition, the disallowing of charitable contributions, or the disallowing of participation of individuals in the securities business on governmental or civic boards shows your desire not to be contributing as a good corporate neighbor of those counties where you do business," the sample letter continues. "This is totally irresponsible."
Roberts said the counties association's resolution condemning the proposed MSRB rule is virtually identical to that approved on Sunday in Orlando by the National League of Cities at its annual Congress of Cities meeting.
Like the League's resolution, the one adopted by the counties association expresses concern that the rule "would deny citizens their constitutional right to full participation in the electoral process ... if those citizens are engaged in the municipal securities industry."
The counties association's resolution also stated -- in language that parallels the League's resolution -- that the rule would require "significant new, unfunded financial disclosure burdens and requirements."
Carl Crawford, director of news and communications for the counties association, confirmed yesterday that the group had approved the resolution by a voice vote last Thursday. He also said that association members had asked staff to research the feasibility of preparing a lawsuit to fight the proposed MSRB rule, if enacted.
Heather Ruth, president of the Public Securities Association, said the sample letter reflects a misunderstanding of the role that the 17 firms have had in the MSRB's proposed rule.
"The PSA and its members are themselves actively involved in formulating reactions to the G-23 proposal -- they did not create the proposal," she said. "With respect to the document [the sample letter], it seems to equate MSRB's proposed rule and the principals espoused by the group of 17 on Oct. 18," she continued. "There is a confusion here."
Ruth also contested the letter's implied distinction between the 17 firms and the perspective toward campaign contributions and local government held by minority, women-owned, or regional firms.
"We see support for regulating campaign financing activity among a broad spectrum of our members, not just those that are very large," she said.
Roberts said she would also strongly oppose Florida Gov. Lawton Chiles if he proposes a state law that would ban campaign contributions from municipal market participants vying for local governmental business.
The proposal, which a Chiles aide said last month is being considered by the governor, would extend to all local governments in Florida the current administrative rules governing the participation of underwriters, bond lawyers, and financial advisers in state-level bond offerings.
"As I see it, this would impose the same kind of unconstitutional restraint being considered by the MSRB," Roberts said.
~I Take Great Personal Offense . . .'
The following is a copy of the sample letter distributed by the Florida Association of Counties to county commissioners in the state. The letter urges a boycott of 17 large securities firms over what it described as the firms' support of the Municipal Securities Rulemaking Board's proposed rule banning political contributions to local governments.
Dear Big 17: As an elected county official, I am writing to comment on your and your company's support of MSRB Rule G-37. My personal commitment to the implementation of continuing the highest code of ethics remains, not only with the municipal securities industry, but also in my dealings with any and all industries that deal with county government. I absolutely share the need and desire to work within a system that is clearly framed and equally applied. To that end, the proposed MSRB Rule G-37, in the attempt to achieve the goal we all share, unfortunately falls short of attaining its necessary objectives, particularly in its treatment of regional, minority and women owned securities firms. I take great personal offense that you would support the premise that political contributions provide a basis or have a direct relationship in the selection of securities firms that participate in transactions in which I play a fiduciary role. In addition, the disallowing of charitable contributions or the disallowing of participation of individuals in the securities business on governmental or civic boards shows your desire not to be contributing as a good corporate neighbor in those counties where you do business. This is totally irresponsible. As an action item, I am proposing that our county board not award any senior managed issues to any of the Wall Street 17, who have or are endorsing such public policy damaging rules. I am further proposing that the lead go to qualified regional, minority and women owned securities firms, since it is obvious that under these new rules, they will be the firms sensitive to our community. I trust you will recognize the far-reaching negative effects that G-37 and newly proposed G-20 will have on our democratic system. I further hope that you not only withdraw your support of such initiatives, but will join in support of the regional, minority and women owned coalition who have formed to formally oppose these measures. We all want an open and honest process. To that end, I do not feel this has been either. Sincerely, County Commissioner