WASHINGTON-- Municipal bond reforms, including possible legislation requiring registration of conduit bonds with the SEC, will be a priority issue for the House Energy and Commerce Committee's securities panel next year, according to the panel's chairman.

Rep. Edward Markey, D-Mass., said that while the Securities and Exchange Commission and the Municipal Securities Rulemaking Board are "headed in the right direction" in their efforts to imporve bond disclosure and price transparency, the subcommittee will hold hearings next year to examine those efforts and the needs for further reforms.

Markey chairs the Energy and Commerce subcommitte on telecommunications and finance. He made his comments on Monday at The Bond Buyer's second annual Northeast Public Finance Conference, in Boston.

"I anticipate that the subcommittee will be considering the need for certain legislative reforms, such as extending SEC registration requirements to municipal conduit bonds used to finance private business activities [like] the construction of nursing homes or industrial facilities," Markey said.

The subcommittee will also take up several issues that Congress failed to act upon before it adjourned, Markey said. These include a measure to make the SEC a self-funded agency, a bill to increase SEC inspections of investment advisers, and the question of whether legislation is needed to regulate the derivatives activities of securities firms' affiliates.

Markey indicated that he will also be watching to see if the National Association of Securities Dealers reconsiders its proposed sales practice rules for government securities.

Markey complained that the rules have "serious deficiencies" and could allow dealers to sell institutional customers derivatives products that are unsuitable for them.

Markey blasted Sen. Phil Gramm, R-Tex., for killing a compromise bill on investment advisers that had passed the House and was pending in the Senate when Congress adjourned earlier this month.

"Gramm killed this bill because it was too tough on convicted felons," Markey said.

Markey was referring to Gramm's opposition to a provision of the bill that would have barred convicted felons from becoming registered investment advisers.

Gramm thought "such a ban would deprive these individuals of a possible way to make a living and was therefore unfair," Markey said.

Gramm also opposed the bill's proposed creation of a toll-free number through which investors could obtain the disciplinary history of investment advisers because he "thought it was too expensive," Markey said.

"We do not know, and will probably never know, what Sen. Gramm would have done if we had agreed to remove these eminently sensible reforms from the bill, though I suspect that other vital concerns would have emerged," Markey said.

A spokesman for Gramm said last week that the senator opposed the new fees, believing they would stifle cornpetition within the industry and put small investment advisers out of business.

Markey seemed bitter that Gramm blocked the bill after key House and Senate members spent considerable time working out compromise provisions tO address many of Gramm's concerns.

The bill, which Markey and other lawmakers worked on for more than four years, is aimed at protecting states, localities and other investors from unscrupulous investment advisers who engage in fraudulent and manipulative conduct.

The measure would increase the SEC's registration fees for investment advisers and authorize the commission to use the money to inspect more advisers for compliance with securities laws.

Currently, anyone who sends the SEC a check for $150 can be an investment adviser, Markey said. The SEC has only 51 inspectors to monitor the 22,000 registered investment advisers, which translates into about an inspection of an adviser ofice every 30 years, he said.

Markey was also critical of a handful of senators, including Gramm, who temporarily blocked a bill needed to fund the SEC for the current fiscal year, which began Oct. 1.

The delay in approving the bill forced the SEC to halt nonessential services and expenditures and to reduce its primary registration fee, at a cost of roughly $20 million to the U.S. Treasury.

Markey said that the senators held up the bill, knowing it was costing taxpayers, at the same time that their Republican colleagues were announcing a "Contract with America" that calls for a balanced budget amendment.

"So now I'm waiting for some clever plaintiffs' lawyer to file a breach of contract lawsuit against these eight Republican Senators to get the taxpayers' $20 million back," he said.

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