Cities Urged to Increase Bond Scrutiny: California...

Cities Urged to Increase Bond Scrutiny: California officials are proposing that mayors and city councils more closely monitor municipal-bond issues to improve disclosure practices and avoid coming under Securities and Exchange Commission investigation. The California Debt Advisory Commission’s draft guidelines, being circulated this week, accuse local officials in the state of too often “rubber-stamping” bond documents that omit key information. The guidelines, the first effort by a state agency to help localities comply with tougher SEC standards, seek to address widespread confusion among localities concerned about being charged by the federal agency. About a dozen California counties and cities--including six in Orange County--are being investigated by the SEC as part of a crackdown on abuses in municipal finance. The SEC brought its first case against a municipality in January, when Orange County agreed to settle disclosure fraud charges connected to its $1.7 billion bankruptcy by promising not to commit future violations.