SEC: More Transparency Needed In Auction-Rate Securities Mkt

Mar.12, 2008 in Market Outlook

Last Update: 3/12/2008 10:00:51 AM

By Michael R. Crittenden

Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–The Securities and Exchange Commission plans to push for
more transparency in the auction-rate securities market, an agency official told
a U.S. House committee on Wednesday.

“The current lack of price transparency for auction-rate securities may be
exacerbating this situation,” Erik Sirri, director of the SEC’s division of
trading and markets, said in prepared remarks for a House Financial Services
hearing.

Sirri said SEC staff plans to ask the Municipal Securities Rulemaking Board to
expand a proposal to increase price transparency for auction-rate securities. The
SEC wants dealers in auction-rate securities to report the same type of
information that is already reported for Treasury auctions.

Disclosure in the municipal securities market, Sirri said, “is substantially less
comprehensive and less readily available than disclosure by public reporting
companies.”

The dislocation in the auction-rate securities market has caused concern from
Wall Street to Washington, and was one of the major catalysts for Wednesday’s
hearing as policymakers seek to address a growing number of failed auctions. The
panel also plans to scrutinize problems with bond insurance companies like MBIA
Group Inc. (MBI).

Financial Services Chairman Barney Frank, D-Mass., has been highly critical of
bond insurance companies. He said in a speech earlier Wednesday that selling
insurance on rarely-failing municipal bonds was akin to “selling life insurance
to a vampire.”

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