SEC is probing bond issues in Atlanta, Dade County, Fla., sold in 1990, 1991.

ATLANTA -- The Securities and Exchange Commission has begun separate inquiries into two Dude County, Fla., and two Atlanta bond issues, documents show.

The SEC's request for documents covers a $190 million solid waste financing issued by Dade County in December 1990 and an $8 million issue sold by the county's Educational Facilities Authority in March 1991 for Florida International University.

The commission's request for information on the Atlanta deals involves $3 19.2 million of bonds sold in December 1990 to finance airport construction and $27.4 million of certificates of participation issued in May 1991 to renovate the city hall.

According to letters from the SEC written by senior counsel Kathleen M. Hamre and obtained by The Bond Buyer, the commission on April 11 asked Dude County's finance director, Edward Marquez, to provide information on the Miami-area bond sales. On April 12, a separate request was sent to Atlanta's chief financial officer, Michael Bell, for documents on the Atlanta deals.

In addition, in June, the commission wrote Bell, asking him to provide documents relating to Atlanta's $1.3 billion investment portfolio.

The SEC's request for documents was first reported Aug. 3 in the Miami Herald.

Earlier this June, the city opened an investigation into the investment fund after finding that a single firm, Philadelphia-based Pryor McClendon & Counts, handled $6.82 billion of $8.79 billion of securities traded in the portfolio last year, or 77.6% of the total.

The SEC's requests for documents on the four bond issues detailed 11 categories of information sought on each deal. The categories included solicitation of campaign contributions by issuers, campaign gifts by underwriters, and "reimbursements" of contributions made to issuers. In addition, the commission asked for documents relating to the choice of bond syndicates.

The letter requesting information on Atlanta's investments sought all city documents pertaining to the securities traded for the portfolio in 1993.

For both the Florida and Atlanta topics, the SEC's letters noted that response to the request was voluntary and "should not be construed as an indication" that violations of law had occurred.

An SEC spokesman declined comment on the inquiries.

Dade Couty's Marquez said in an interview last Friday that he is cooperating fully with the commission and has turned over all documents requested.

"It is my understanding that the request for the Dade County records is part of a national investigation into campaign contributions and the bond business," said Marquez, who was finance director for Dade at the time of the requested offerings. "I do not think the focus is on us."

For more than a year, the SEC has been following up on reports of political influence peddling and questionable campaign contributions. Last summer, it began sending letters to more than 70 firms active in public finance requesting information on this topic. Since June of this year, the commission has looked into this issue in bond deals in Margate, Fla., and Alameda County, Calif.

Bell said yesterday that Atlanta has sent the SEC records it requested on the bond issues as well as information into the separate investigation of the investment portfolio. Bell became chief financial officer in October 1991, after both the Atlanta deals were sold.

The $319.2 million Atlanta airport offering was negotiated by a syndicate led by Pryor McClendon. The city hall financing was led by senior manager Sovran Investment Corp. and sole co-manager Howard Gary & Co.

In the Florida financings, Smith Barney Inc. was the lead manager on the solid waste deal. Southeastern Capital Group served as the lead manager of the Florida International University transaction, with Jackson Securities Inc. serving as the sole co-manager.

Atlanta-based Jackson Securities is owned by the city's former mayor, Maynard Jackson. At the time of both the university bond deal and city hall financing, Jackson was serving his second term as mayor, a stint that lasted from 1990 through 1993.

Howard Gary, founder of the Miami-based firm bearing his name, was vice chairman of the Dade County Educational Facilities Authority at the time of the university bond issue.

Richard Wagner, chief executive officer of Southeastern at the time of the university deal in 1991, said that he received a letter from the SEC in January requesting information about the choice of a minority-owned underwriter in the transaction.

"Most of the request was pretty routine, so the question about the participation of minority firms kind of caught my eye," he said.

Both Jackson Securities and Howard Gary & Co. are minority-owned firms. Southeastern is not. Wagner said he cold not recall any pressure to include Jackson Securities in the deal.

A Smith Barney spokesman confirmed that his firm received an SEC request in January for documents relating to the firm's contact with Dade County officials and its underwriting of the $190 million solid waste offering. The firm is cooperating fully with the request, he said.

A spokesman for Pryor said yesterday that it is treating any contacts it may have had with the SEC as non-public information.

In an interview with The Bond Buyer in June, Pryor's chairman, Malcolmn D. Pryor, vigorously denied that his firm had engaged in any improprieties in handling the investment portfolio.

A spokesman for Howard Gary declined comment on the investigation. Officials at Jackson Securities could not be reached for comment.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER