Boxer and Investors Commiserate : Reaction: Politicians, including the senator, join individuals with O.C. holdings in addressing a fact-finding session.

Duke Miller, fighting the flu, commiserated with U.S. Sen. Barbara Boxer on Thursday about the thousands of dollars his 14-year-old son invested in the now-frozen county investment pool.

“Don’t beat yourself up over this,” the senator told the 37-year-old civil engineer. “Obviously, this has stunned even the most sophisticated investors.”

Miller was among about 40 investors, finance experts and public officials who spoke at Anaheim City Hall during a two-hour fact-finding session on the failure of the county’s investment fund.

In order to “put a public face” on the debacle, Boxer said she invited the Laguna Beach resident to speak. Miller said he had been urged by a judge to invest the $9,630 his son received in an accident settlement into the fund.

State Controller Gray Davis, who also appeared at the session, said the County Board of Supervisors is ultimately to blame for the situation for giving former Treasurer-Tax-Collector Robert L. Citron free reign.

“It’s important to have oversight,” Davis said. Citron “essentially acted without any other authority with items being approved on the consent calendar with no debate. Now all of the citizens are going to pay a price for all of the excesses.”

Davis said Citron was “almost arrogant” over the years when discussing his investment strategies and asked state officials why they didn’t experience the same success.

“Higher risk means there is a day of reckoning,” Davis said.

Davis also focused on school districts, which have $1 billion invested in the now-frozen county investment pool. He said the state is obligated to make sure all children are educated, and “we may have to pick up part of the tab.”

Davis was critical of the five school districts in the county that have borrowed money invested in the pool.

“It’s just outrageous that a school district would go out and borrow millions of dollars to invest in hopes of getting a higher return,” Davis said.

The controller said his primary concern is to make sure that state funds intended for schools and highways do not get tied up in bankruptcy proceedings.

“It’s intended for public purposes, and we don’t want it being used to pay off creditors,” he said.

Boxer repeated her call on Republican House leaders to drop the securities law section of their “contract with America,” a plan that she said would make it more difficult for investors in the county fund to sue successfully if they believe they were victims of fraud.

Rep. Christopher Cox (R-Newport Beach), who wrote the securities section in the Republican plan, said this week that it is targeted at frivolous lawsuits.

Both Boxer and Cox have said they will push for legislation requiring municipalities to provide the same disclosure to potential investors as corporations provide when they issue shares.

Boxer said she also wants to focus on derivatives, which she called “the new scam of the ‘90s.”

“Sometimes they may be a good hedge, other times, they may be a disaster. Are broker-dealers being honest about the risk?” she asked.

In an interview after the session, Boxer called the county’s financial troubles “a shocking thing all the way down the line. They kept adding debt on debt.”

Boxer said hearings in the Senate Banking Committee on the Orange County situation will begin during the first week in January.