WASHINGTON -- Securities and Exchange Commission Chairman Arthur Levitt Jr. late yesterday asked 11 trade groups representing issuers, bond lawyers, dealers, and financial advisers to join the Wall Street firms that last week voluntarily agreed to a massive cutback of political contributions to issuers.
"On Oct. 18, seventeen of the nation's largest municipal securities underwriting firms agreed to discontinue the practice of making political contributions that attempt or appear to attempt to influence the selection of the firm as an underwriter," Levitt said in a one-page letter sent to the groups that included a copy of the two-page "statement of initiative" reached by firms.
Calling the firms' initiative a "a significant and substantial step forward Levitt said he believes that the accord's principles "should be reviewed, considered, and embraced by all participants in the municipal securities underwriting process."
He said he would appreciate the help of each group "as a leader of a significant group of municipal securities market participants" in developing a "process by which members ... can establish or endorse principles such as those outlined in the voluntary initiative."
"I believe these principles represent a model for developing industry standards that both protect investors and the integrity of the municipal securities market.'
The letter went to the Government Finance Officers Association; the National Association of Bond Lawyers; Public Securities Association; Association of Local Housing Finance Agencies; National Association of State Auditors, Comptrollers and Treasurers; National Council of Health Facilities Finance Authorities; National Association of Independent Public Finance Advisers; National Council of State Housing Agencies; National Association of State Treasurers; National Association of Securities Professionals, and Securities Industry Association.
Seventeen firms last week voluntarily agreed to bar their municipal departments from contributing to state and local officials who are responsible for awarding lucrative negotiated deals.
Under the voluntary ban, "each firm, employee, political action committees, and each firm's municipal finance professionals, their supervisors, and senior management will be prohibited from making political contributions at state and local levels."
The pact also would prevent municipal executives from soliciting contributions from outside parties, such as their spouses, consultants, and financial advisers.
Executives working outside the municipal divisions will be barred from making contributions only if the donations are made "for the purpose of inducing or influencing the obtaining or retaining of municipal finance business." The executives must also disclose their contributions.
The PSA's regional advisory committee said the panel will take up the issue at an open forum in early November in Chicago, where regional dealers will be invited to face off with politicians on the contributions question.
NABL is expected to announce shortly the appointment of a 10-member panel to develop recommendations on whether lawyers should restrict contributions to state and local officials they do bond deals with.