SECTIONS 53590-53594 - California Statutes

GOVERNMENT CODE

SECTION 53590-53594

53590. The following terms shall have the following meanings for
purposes of this article:
(a) "Bond counsel" means any attorney or firm of attorneys that
represents the issuer of a new issue of bonds with respect to the
issuance of the bonds and that renders a written legal opinion to, or
as counsel for, the issuer with respect to the validity of the
bonds.
(b) "Bond" means any bonds, notes, or other evidences of
indebtedness issued by any local agency or certificates of
participation in any lease, sale, or other obligations of any local
agency. "New issue of bonds" means the original issuance of bonds,
including refunding bonds, by the issuer to one or more purchasers
until, in the case of underwriters, the end of the underwriting
period. In the case of bonds with a tender or put option feature, or
commercial paper, "new issue of bonds" means only the original
issuance and not any remarketing, rollover, or reissuance.
(c) A "financial advisory relationship" exists when an investment
firm, or other person or firm in the business of providing financial
advisory or financial consulting services to issuers with respect to
municipal securities, renders, or enters into an agreement to
render, financial advisory or financial consultant services to, or on
behalf of, an issuer with respect to a new issue or issues of bonds,
including advice with respect to the structure, timing, terms, and
other similar matters concerning the issue or issues, for a fee or
other compensation or in expectation of such compensation for the
rendering of those services. However, a financial advisory
relationship does not exist when, in the course of acting as an
underwriter, an investment firm renders advice to an issuer,
including advice with respect to the structure, timing, terms, and
other similar matters concerning a new issue of bonds or when, for
any new issuer of bonds, an investment firm advises and assists an
issuer with respect to obtaining consent from holders of previously
issued bonds in connection with, among other things, amendments of
covenants or defaults.
(d) "Investment firm" means any bank, investment bank,
partnership, corporation, association, or other firm engaged in the
business of buying and selling bonds for its own account or for the
account of others as part of its regular business.
(e) "Local agency" means a public district, public corporation,
authority, agency, board, commission, county, city and county, city,
school district, or other local public entity.

53591. No investment firm that has, or has had, a financial
advisory relationship with respect to a new issue of bonds shall
acquire as principal either alone or as a participant in a syndicate
or other similar account formed for the purpose of purchasing,
directly or indirectly, from the issuer all or any portion of the
issue, or arrange for the acquisition or participation by a person
controlling, controlled by, or under common control with the
investment firm, unless the issue is to be sold by the issuer at
competitive bid and the issuer has, prior to the bid, expressly
consented in writing to the acquisition or participation. The
limitations and requirements set forth in this section also apply to
any investment firm controlling, controlled by, or under common
control with the investment firm having a financial advisory
relationship. The use of the term "indirectly" in this section does
not preclude any investment firm which has a financial advisory
relationship with respect to a new issue of bonds from purchasing any
of those bonds from an underwriter, either for its own trading
account or for the account of its customers, except to the extent
that the purchase is made to contravene the purpose and intent of
this section.

53592. Each financial advisory relationship shall be evidenced by a
written document executed prior to, upon, or promptly after the
inception of the financial advisory relationship, or promptly after
the creation or selection of the issuer if the issuer does not exist
or has not been determined at the time the relationship commences.
That written document shall set forth the basis of compensation for
the financial advisory services to be rendered, which, except for
bonds issued prior to January 1, 1988, to finance single-family or
multifamily housing, shall be on a basis other than as a percentage
of the amount of the bonds to be sold.

53593. No bond counsel with respect to a new issue of bonds shall
also be counsel, with respect to that new issue of bonds, to the
underwriter or other initial purchaser of the bonds. This section
does not preclude the bond counsel from rendering one or more
opinions to the underwriter or purchaser with respect to the bonds,
the documents or laws pursuant to which the bonds are issued, the
official statement, offering circular, or other disclosure document
describing the bonds, or any related matter, if the opinion is
rendered as bond counsel and not as counsel to the underwriter or
purchaser.

53594. Injunctive relief shall be available, subject to judicial
discretion, to prohibit or enjoin any violation of this article, but
no violation shall affect the authority, validity, or enforceability
of bonds.