THIS IS AN ADVERTISEMENT.
Peck Shaffer has a distinct practice area focused on the offering and sale of municipal securities. Our services include advising underwriter clients with respect to compliance with federal and state securities laws in the sale of municipal securities and advising governmental issuers and underwriter clients as to the disclosure requirements of the Securities and Exchange Commission for the offering of municipal securities and their ongoing obligation to provide detailed information after the transaction closes.
SECURITIES
Compliance with state securities laws. Brokers and dealers of municipal bonds must comply with various state securities acts, which are generally referred to as "blue sky" laws (federal securities acts focus more on the national markets). Peck Shaffer provides advice and Blue Sky surveys and investment memoranda to underwriter clients to ensure compliance with provisions such as registration requirements for securities sold within the state, registration exemptions for certain securities, registration requirements for broker-dealers, agents and investment advisors and antifraud provisions. (See "UNDERWRITER'S COUNSEL" for more information on underwriter's counsel services.)
Solutions for "problem states." Peck Shaffer has years of experience in dealing with "problem states," an informal designation given to states whose securities laws present problems for issuers and underwriters of municipal securities. Most states have adopted some form of the Uniform Securities Act (the "Uniform Act"). The "problem states" have either not adopted the Uniform Act or have substantially changed the language of the government securities exemption which was in the original Uniform Act. Among the states which are sometimes considered to be "problem" states are Maine, Minnesota, Montana, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Dakota, Texas, Vermont, Washington and Wisconsin. Some of the other states may also be a problem for certain types of municipal issues. The states listed above generally require some type of filing for exemption or registration of the municipal securities, or require certification that the issuer or guarantor is not in default on any of its obligations.
Avoiding civil and criminal liability. The attorneys at Peck Shaffer help underwriter clients to avoid committing registration or antifraud violations, which are usually defined as felony offenses under the Uniform Act and other state securities laws. For example, if a security is not registered or exempt from registration, and is sold in violation of the registration requirement, such a sale constitutes a felony offense under the Uniform Act. This offense imposes absolute liability under the Uniform Act; it is not a defense that a seller does not know that what he is selling is a security or that it needs to be registered, and it is no defense to have sought advice of counsel. Such a sale will also result in civil liability upon the part of the "seller" of the security, a term which covers many people, including the person whose securities are sold, the broker-dealer who sells the securities on behalf of the owner, the registered representative of the broker-dealer who handles the sale, and has even been extended to persons involved in the selling process who have no direct contact with the buyer. A purchaser of a nonregistered, nonexempt security is entitled to the return of all the consideration he paid for the securities, plus interest, rong> When clients consider sophisticated investment products (such as escrow restructurings, swaps and other hedges and gross funded float agreements), worries arise as to whether the financial and other risks associated with these products outweigh the gains. In the case of swaps or hedges, there is usually an informed balancing. In the case of investment products and escrow restructurings, the gains typically outweigh the potential risks, which are minimal.
Uncovering hidden savings in previous financings. The tax attorneys at Peck Shaffer use their considerable experience to help identify any possible strategy for recovering hidden savings for previously issued bonds. We have reviewed and supervised hundreds of transactions and are familiar with current strategies to reduce negative arbitrage and to ensure swap integration in computing bond yield. Over the past three years, tax attorneys at Peck Shaffer have uncovered escrow restructuring opportunities and project fund investment strategies where the window of opportunity was closing quickly. These strategies generated approximately $25 million in aggregate savings that could have been lost if the strategies were not employed in a timely fashion. Such complex strategies require proactive thinking and the Peck Shaffer tax attorneys pride themselves on being proactive as opposed to simply reacting.
Devising an optimal financing structure at the outset. Federal tax matters are a critical component of every tax-exempt financing and a great deal of time is consumed in the tax related analysis of every financing. The tax department provides a wide array of services to issuers, banks, underwriters and borrowers, including verification of cash flows, determination of arbitrage yield, calculation of arbitrage rebate amounts and development of optimal structures for every type of financing, including advance refundings, cash flow borrowings and all types of new money borrowings. We have built a strong reputation for determination and thoroughness in achieving savings for issuers through innovative financing structures and the development of permissible investment strategies.
Interest rate swaps and similar hedging instruments. Our firm is on the cutting edge when it comes to the use of hedging instruments (including interest rate swaps, swaptions, interest rate caps and basis swaps) and their impact on the yield of both bonds and investments. We are familiar with all aspects of the hedge integration rules and have served as bond counsel and special tax counsel on numerous advance refundings and new money issues involving variable rate bonds that were economically converted to fixed rate obligations through interest rate swaps. We have also developed a tax analysis to achieve yield restriction compliance for borrowers who want to generate greater interest rate savings by using LIBOR swaps.
Representative transactions. We have been involved with over 20 transactions during the past three years in which issuers and conduit borrowers have recouped millions of dollars in savings associated with unavoidable existing negative arbitrage in escrow funds. In addition, our tax attorneys suggested several project fund investments strategies that enabled one issuer to recoup approximately $4 million and another issuer to recoup over $3 million.