BOND TICKER : ORANGE COUNTY IN BANKRUPTCY : 34 Laid Off Workers Called Back Under Judge’s Ruling

At least 34 Orange County government workers who received pink slips last month have now been called back to work because of a federal judge’s ruling that the county must consider seniority rights when ordering layoffs to deal with its ongoing financial crisis.

But the county on Tuesday laid off 16 more people to compensate for the rehired workers, and that number could increase, depending on how many of the 34 take their jobs back, county personnel officials said.

Since the Dec. 6 bankruptcy filing, the county has issued 152 pink slips. Those who were not rehired can appeal their firings in an expedited hearing process established Friday by U.S. Bankruptcy Judge John E. Ryan.

* The Orange County Transportation Authority on Wednesday made $46 million in debt service payments on Measure M bonds, officials said.

The OCTA made the payments--which cover both principal and interest--with $36 million in Measure M tax revenue collected since the county declared bankruptcy on Dec. 6. Some of the remaining money came from a debt service reserve fund.

The transaction marks the first major debt payment on Measure M bonds since the bankruptcy, according to an OCTA statement. Measure M is a half-cent sales tax approved by county voters in 1990 to benefit transportation.

* A Smith Barney Inc. employee has alleged that the brokerage withheld information from federal investigators probing the way municipal bonds are underwritten and sold, sparking new inquiries by officials in Orange County as well as Florida and Massachusetts.

Memos written by Michael Lissack, a managing director at Smith Barney, allege that Smith Barney failed to provide vital financial information about the Orange County bankruptcy.

Lissack said in his memo that Smith Barney knew Orange County’s investment pool was in trouble but failed to disclose the information to investors as required by federal securities law.

Smith Barney said Lissack’s allegations are without substance and “out and out defamation.” The firm said Lissack, who could not be reached for comment, is on administrative leave while it decides the “terms of his departure from the company.”

Lissack said in his memo that Smith Barney knew the county’s investment pool, which ultimately suffered $1.69 billion in losses, was in trouble but failed to disclose the information to investors as required by federal securities law.

Compiled by Shelby Grad with staff and Reuters reports.