TRAVERSE CITY, Mich. -- Sponsorships of public finance conferences by municipal securities firms is a gray area under the Municipal Securities Rulemaking Board's ban on campaign contributions, an industry executive said yesterday.

R. Fenn Putman, a managing director at Lehman Brothers and chairman of the Public Securities Association, said it is still unresolved whether or not the ban that went into effect April 25 covers sponsorship of conferences.

"I don't think so, but it still has to be tested out," Putman said in a speech here at a public finance conference sponsored by the Michigan treasurer's office and some state bonding authorities.

He said he would interpret conferences like the one in Michigan as educational and not involving the kinds of abuse the MSRB's Rule G-37 was designed to thwart.

"I don't think we can stop doing everything," Putman said.

The annual Michigan conference, which is attended by a number of local and state finance officials, saw the number of sponsors drop this year as a result of the ban.

About eight fewer securities firms agreed to sponsor the event this year compared to last year, said Judie Town, the conference's coordinator. Most of the firms ran the sponsorship past their legal departments and some opted not to be sponsors and because of uncertainty over the MSRB's rule, Town said. A general sponsorship of the conference cost $500.

Still, the program for the conference lists more than 20 securities firms as sponsors. Town said that another three firms gave $500 apiece but asked that their names not appear in the program.

Nick Khouri, Michigan's chief deputy treasurer, said that if Rule G-37 is clarified, "We, of course, will restructure the conference to fit the rule."

Sara Eubanks, executive director of the Michigan Municipal Bond Authority, said the conference is an opportunity for local government officials to learn more about public finance. Sponsorships are not considered when firms are selected for the authority's bond issues, she said.

Khouri also said sponsorships are not a consideration for inclusion in state bond issues.

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