Municipal bonds and other securities offerings by governmental entities generally are exempt from federal securities law registration requirements. However, information about such offerings is available from sources other than the U.S. Securities and Exchange Commission.
Municipal bond “official statements” or offering documents are filed by underwriters of the bonds with the Municipal Securities Information Library of the Municipal Securities Rulemaking Board and with four private entities known as Nationally Recognized Municipal Securities Information Repositories or NRMSIRs. The NRMSIRs also collect information concerning annual financial data and significant events such as defaults concerning municipal securities. Three states — Texas, Michigan, and Ohio — maintain their own information depositories containing information about municipal securities issued in those states.
The Municipal Securities Rulemaking Board was created through the Securities Acts Amendments of 1975. The Board was established to set rules governing the conduct of those involved in the trading of municipal securities in lieu of governing the conduct of municipalities and other governmental entities in issuing bonds. The Board is composed of equal numbers of public members, bank dealer representatives, and securities dealer representatives. Although the Board is considered a self-regulating organization and its activities are subject to oversight from the Securities and Exchange Commission, funding of the Board comes from fees and assessments charged to bond dealers rather than from the federal government.
The Board has authority comparable to other self-regulating organizations such as the New York and American Stock Exchanges and Nasdaq. Thus, the Board is authorized to make rules to prevent fraudulent and manipulative acts and practices and to promote fair trading practices regarding municipal securities. Such rules are adopted after review by the Securities and Exchange Commission and publication in the Federal Register. Enforcement of the rules is delegated to the National Association of Securities Dealers for securities firms subject to the rules. Enforcement of the Board’s rules that are applicable to banks has been delegated to the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Comptroller of the Currency.
Your attorney-in-fact only has the financial authority you grant him in the document creating a durable power of attorney for finances. Generally, an attorney-in-fact has broad authority to:
- use your assets to pay your everyday expenses and those of your family
- handle transactions with financial institutions
- buy, sell, maintain, and mortgage property
- file and pay your taxes
- manage your retirement accounts
- collect benefits from government programs or civil or military service
Beyond routine financial matters, you may want to authorize your attorney-in-fact to:
- invest your money in securities
- buy and sell insurance policies and annuities for you
- operate your small business
- claim or disclaim property you get from others
- represent you in court
An attorney-in-fact cannot:
- make healthcare decisions for you
- marry on your behalf
- adopt for you
- vote in public elections on your behalf
- make a will for you
The attorney-in-fact you appoint in your durable power of attorney is known as a “fiduciary,” which is someone who holds a position of trust and must act in your best interests. Thus, your attorney-in-fact is required to:
- be careful with your property by handling it honestly and prudently
- avoid conflicts of interest
- keep your property completely separate from her own
- keep adequate records for all transactions made on your behalf
An attorney-in-fact is not directly supervised by a court and, as such, is not required to file reports with any government agencies. However, a loved one who has doubts about the attorney-in-fact may ask a court to order the attorney-in-fact to take certain actions or ask a court to terminate the power of attorney-in-fact and appoint a conservator to supervise your affairs. If a conservator is appointed for you, the attorney-in-fact has to account to the conservator. Some states have statutes that set out specific procedures for such court actions.
Due to the risk of volatility in the value of securities, the Securities and Exchange Commission requires that a securities transaction must be settled or completed within three business days. “T+3” is the name given to this settlement requirement.
The “T+3” rule revised a “T+5” rule that allowed the passage of five business days between the execution of a trade order and the payment for or delivery of the securities that were traded. Under the “T+3” rule, the payment from an investor who buys a security must be received by the securities brokerage firm no later than three business days after the purchase. Thus, a person who buys a stock on Friday must pay for the stock through funds received by the broker no later than the following Wednesday; a person buying a stock on a Monday would have to be sure the broker receives the purchase funds no later than the next Thursday. When a person sells a security, the security certificate must be in the hands of the selling broker no later than the third business day following the sale.
The “T+3” time requirement for settling securities trades applies to most forms of securities, including stocks, bonds, municipal bonds, mutual funds traded through a broker, and exchange-traded limited partnerships. However, stock options and trades in U.S. Government securities must be settled on the next business day following the trade.
If the “T+3” rule is broken by an investor, the brokerage firm may choose to impose additional fees or interest or execute a trade and impose the loss of any value in the security on the investor. On the other hand, while securities firms must provide funds or securities certificates to investors “promptly” after settlement of a trade, specific three-day or other deadlines are not set by rules of the Securities and Exchange Commission.