Municipal Securities

Corporate Bonds – Price, Face Value, Maturity, Coupon Rate and Yield to Maturity – South Florida Business and Corporate Litigation Attorney

Published on: July 1, 2013 | By Russell L. Forkey, P.A.

Key Words and Phrases Associated with Corporate Bonds:

The basic financial terms of a corporate bond include its price, face value (also called par value), maturity, coupon rate, and yield to maturity. Yield to maturity is a widely used measure to compare bonds. This is the annual return on the bond if held to maturity taking into account when you bought the bond and what you paid for it.

A bond often trades at a premium or discount to its face value. This can happen when market interest rates rise or fall relative to the bond’s coupon rate. If the coupon rate is higher than market interest rates, for example, then the bond will likely trade at a premium.

Secured vs. Unsecured Corporate and Municipal Bonds – South Florida FINRA Arbitration and Litigation Attorney – You May Be Able To Recover Your Investment Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Secured vs. Unsecured Corporate and Municipal Bonds – What happens if a company goes into bankruptcy? South Florida FINRA Arbitration and Litigation Attorney – You may be able to recover your investment losses.

If a company defaults on its bonds and goes bankrupt, bondholders will have a claim on the company’s assets and cash flows. The bond’s terms determine the bond-holder’s place in line, or the priority of the claim. Priority will be based on whether the bond is, for example, a secured bond, a senior unsecured bond or a junior unsecured (or subordinated) bond. In the case of a secured bond, the company pledges specific collateral-such as property, equipment, or other assets that the company owns-as security for the bond. If the company defaults, holders of secured bonds will have a legal right to foreclose on the collateral to satisfy their claims. Bonds that have no collateral pledged to them are unsecured and may be called debentures. Debentures have a general claim on the company’s assets and cash flows. They may be classified as either senior or junior (subordinated) debentures. If the company defaults, holders of senior debentures will have a higher priority claim on the company’s assets and cash flows than holders of junior debentures. Bondholders, however, are usually not the company’s only creditors. The company may also owe money to banks, suppliers, customers, pensioners, and others, some of whom may have equal or higher claims than certain bond holders. Sorting through the competing claims of creditors is a complex process that unfolds in bankruptcy court.

However, investors usually purchase and sell corporate and municipal bonds through securities broker/dealers. Under certain circumstances, investments losses suffered by investors, in these types of bonds, may be recoverable from the brokerage firm. Therefore, it is important for the reader to consult with a qualified professional.

Basic Characteristics of Corporate and Municipal Bonds – Florida FINRA Arbitration and Litigation Attorney – Investment Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Basic characteristics of corporate and municipal bonds – South Florida FINRA Arbitration and Litigation Attorney – As an investor, you may be able to recover losses associated with your investment in corporate bonds.

Corporate bonds make up one of the largest components of the U.S. bond market, which is considered the largest securities market in the world. Other components include U.S. treasury bonds, other U.S. government bonds, and municipal bonds. Companies use the proceeds from bond sales for a wide variety of purposes, including buying new equipment, investing in research and development, buying back their own stock, paying shareholder dividends, refinancing debt, and financing mergers and acquisitions.

Bonds can be classified according to their maturity, which is the date when the company has to pay back the principal to investors. Maturities can be short term (less than three years), medium term (four to 10 years), or long term (more than 10 years). Longer-term bonds usually offer higher interest rates, but may entail additional risks.

Bond Discount – Florida Bond Investment Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: May 31, 2013 | By Russell L. Forkey, P.A.

Bond Discount – Florida Bond Investment Breach of Fiduciary Duty, Breach of Contract and Negligence FINRA Arbitration and State and Federal Litigation Attorney:

A bond discount is the amount by which the market price of a bond is lower than its face value. Outstanding bonds with fixed coupons go to discounts when market interest rates rise. Discounts are also caused when supply exceeds demand and when a bond’s credit rating is reduced. When opposite conditions exist and market price is higher than face value, the difference is termed a bond premium. Premiums also occur when a bond issue with a call feature is redeemed prior to maturity and the condholder is compensated for lost interest.

Please keep in mind that the information provided in this post is for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

Municipal Bond Insurance – Florida Municipal Security FINRA Arbitration and Litigation Attorney

Published on: May 25, 2013 | By Russell L. Forkey, P.A.

Municipal Bond and Municipal Security – Florida FINRA Arbitration and State and Federal Litigation Attorney:

A Muni is a popular designation for a municipal security, especially a Municipal Bond. Municipal Bonds are debt obligations of a state or local government entity. The funds received by the entity may support general governmental needs or special projects. Municipal Bonds are generally divided into two broad groups: (1) Public Purpose Bonds and (2) Private Purpose Bonds.

Please keep in mind that the information provided in this post is for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning this post, you should contact a qualified professional.

City of South Miami, Florida – Municipal Bonds – Florida FINRA Arbitration and Litigation Attorney

Published on: May 22, 2013 | By Russell L. Forkey, P.A.

City of South Miami, Florida – Tax Exempt Bond – Florida FINRA Arbitration and State and Federal Court Litigation Attorney:

The Securities and Exchange Commission recently charged the City of South Miami, Fla., with defrauding bond investors about the tax-exempt financing eligibility of a mixed-use retail and parking structure being built in its downtown commercial district.

An SEC investigation found that the city of 11,000 residents located in Miami-Dade County borrowed approximately $12 million in two pooled, conduit bond offerings through the Florida Municipal Loan Council (FMLC). South Miami’s participation in those offerings enabled it to borrow funds at advantageous tax-exempt rates. The city represented that the project was eligible for tax-exempt financing in various documents for the second offering that were relied upon by bond counsel in rendering its tax opinion. However, South Miami failed to disclose that it had actually jeopardized the tax-exempt status of both bond offerings by impermissibly loaning proceeds from the first offering to a private developer and restructuring a lease agreement prior to the second offering.

Municipal Securities and Continuing Disclosure Requirements – Florida Municipal Securities FINRA Arbitration and Litigation Attorney

Published on: May 7, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission Charges City of Harrisburg for Fraudulent Public Statements

The Securities and Exchange Commission (Commission) recently charged the City of Harrisburg, Pa., with securities fraud for its misleading public statements when its financial condition was deteriorating and financial information available to municipal bond investors was either incomplete or outdated.

An SEC investigation found that the misleading statements were made in the city’s budget report, annual and mid-year financial statements, and a State of the City address. This marks the first time that the SEC has charged a municipality for misleading statements made outside of its securities disclosure documents. Harrisburg has agreed to settle the charges.

City of Victorville, Southern California Logistics Airport Authority and Kinsell, Newcomb & De Dios – Florida Municipal Bond Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney

Published on: April 29, 2013 | By Russell L. Forkey, P.A.

Securities and Exchange Commission v. City of Victorville, et al., Civil Action No. EDCV 13-776 JAK (DTBx) (C.D. Cal., filed April 29, 2013)

SEC Charges City of Victorville, Underwriter, and Others with Defrauding Municipal Bond Investors

The Securities and Exchange Commission recently charged that the City of Victorville, Calif., a city official, the Southern California Logistics Airport Authority, and Kinsell, Newcomb & De Dios (KND), the underwriter of the Airport Authority’s bonds, defrauded investors by inflating valuations of property securing an April 2008 municipal bond offering.

Municipal Bonds Failure to Disclose – Florida Municipal Bond FINRA Arbitration and Litigation Attorney

Published on: April 1, 2013 | By Russell L. Forkey, P.A.

Administrative Proceeding No. 3-15237, Before the Securities and Exchange Commission:

The Securities and Exchange Commission recently charged the State of Illinois with securities fraud for misleading municipal bond investors about the state’s approach to funding its pension obligations.

An SEC investigation revealed that Illinois failed to inform investors about the impact of problems with its pension funding schedule as the state offered and sold more than $2.2 billion worth of municipal bonds from 2005 to early 2009. Illinois failed to disclose that its statutory plan significantly underfunded the state’s pension obligations and increased the risk to its overall financial condition. The state also misled investors about the effect of changes to its statutory plan.

Municipal Securities – MSRB Makes Continuing Disclosure Monthly Statistics Available on EMMA

Published on: March 19, 2013 | By Russell L. Forkey, P.A.

MSRB MAKES CONTINUING DISCLOSURE MONTHLY STATISTICS AVAILABLE ON EMMA

The Municipal Securities Rulemaking Board (MSRB) recently announced that it has begun providing on its Electronic Municipal Market Access (EMMA®) website statistics on the number and type of disclosure filings that issuers of municipal securities make available to investors throughout the life of a bond.

These documents consist of important information about a municipal bond that arises after the initial issuance of the bond, such as annual financial information, bond calls and credit rating changes, for example. The continuing disclosure statistics on the EMMA website represent monthly volumes since 2010, categorized by types of disclosure. The disclosures themselves are also available on the EMMA website.