SECTIONS 53690-53692 - California Statutes

GOVERNMENT CODE

SECTION 53690-53692

53690. For the purposes of this article:
(a) "Local agency" means a county, city, city and county,
redevelopment agency, public district, joint powers authority, or
public nonprofit corporation.
(b) "Securities" means any bonds, notes, warrants, or other
evidences of indebtedness and the interest coupons, if any, attached
thereto, issued or proposed to be issued to finance or refinance a
public project.
(c) "Issuer" means a local agency which issues securities.
(d) "Broker" has the same meaning as "broker-dealer" as defined in
Section 25004 of the Corporations Code.
(e) "Dealer" has the same meaning as "broker-dealer" as defined in
Section 25004 of the Corporations Code.
(f) "Municipal securities dealer" means any person, including a
separately identifiable department or division of a bank, trust
company, or savings and loan association engaged in the business of
buying and selling municipal securities for his or her own account,
through a broker or otherwise, but does not include any of the
following:
(1) Any person insofar as he or she buys or sells those securities
for his or her own account, either individually or in some fiduciary
capacity, but not as a part of a regular business.
(2) A bank, trust company, or savings and loan association, unless
the bank, trust company, or savings and loan association is engaged
in the business of buying and selling municipal securities for its
own account other than in a fiduciary capacity, through a broker or
otherwise, unless the bank, trust company or savings and loan
association is engaged in that business through a separately
identifiable department or division, in which case the department or
division, and not the bank, trust company, or savings and loan
association, is the municipal securities dealer.

53691. (a) A financial advisory relationship shall be deemed to
exist when a broker, dealer, or municipal securities dealer renders,
or enters into an agreement to render, financial advisory or
consultant services to, or on behalf of, an issuer, with respect to a
new issue or issues of municipal securities, including advice with
respect to the structure, timing, and terms of an issue or issues,
for a fee or other compensation, or in expectation of compensation
for the rendering of the services. Notwithstanding the foregoing, a
financial advisory relationship shall not be deemed to exist when, in
the course of acting as an underwriter, a municipal securities
dealer renders advice to an issuer, including advice with respect to
the structure, timing, and terms of a new issue of municipal
securities.
(b) Each financial advisory relationship shall be evidenced by a
writing 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). The writing
shall set forth the basis of compensation for the financial advisory
services to be rendered, including provisions relating to the deposit
of funds or the utilization of fiduciary or agency services offered
by the broker, dealer, or municipal securities dealer, or by a person
controlling, controlled by, or under common control with the broker,
dealer, or municipal securities dealer in connection with the
rendering of the financial advisory services.
(c) No broker, dealer, or municipal securities dealer that has a
financial advisory relationship with respect to a new issue of
municipal securities 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, nor arrange for the acquisition or
participation by a person controlling, controlled by, or under common
control with the broker, dealer, or municipal securities dealer,
unless one of the following applies:
(1) If the issue is to be sold by the issuer on a negotiated
basis, all of the following conditions have occurred:
(A) The financial advisory relationship with respect to the issue
has been terminated in writing and, at or after the termination, the
issuer has expressly consented in writing to the acquisition or
participation in the purchase of the securities on a negotiated
basis.
(B) The broker, dealer, or municipal securities dealer has
expressly disclosed in writing to the issuer, at or before the
termination, that there may be a conflict of interest in changing
from the capacity of financial adviser to purchaser of the securities
with respect to which the financial advisory relationship exists,
and the issuer has expressly acknowledged in writing to the broker,
dealer, or municipal securities dealer receipt of that disclosure.
(C) The broker, dealer, or municipal securities dealer has
expressly disclosed in writing to the issuer, at or before the
termination, the source and anticipated amount of all remuneration to
the broker, dealer, or municipal securities dealer with respect to
the issue in addition to the compensation referred to in subdivision
(b), and the issuer has expressly acknowledged in writing to the
broker, dealer, or municipal securities dealer receipt of that
disclosure.
(2) If the issue is to be sold by the issuer at competitive bid,
the issuer has expressly consented in writing prior to the bid to
that acquisition or participation.
The limitations and requirements set forth in this subdivision
shall also apply to any broker, dealer, or municipal securities
dealer controlling, controlled by, or under common control with the
broker, dealer, or municipal securities dealer having a financial
advisory relationship. The use of the term "indirectly" in this
subdivision shall not preclude a broker, dealer, or municipal
securities dealer who has a financial advisory relationship with
respect to a new issue of municipal securities from purchasing those
securities from an underwriter, either for its own trading account or
for the account of customers, except to the extent that the purchase
is made to contravene the purpose and intent of this section. Each
broker, dealer, and municipal securities dealer subject to the
provisions of this subdivision shall maintain a copy of the written
disclosures, acknowledgments, and consents required by this section
in a separate file.
(d) If a broker, dealer, or municipal securities dealer acquires
all or a portion of a new issue of municipal securities or
participates in a syndicate or other account that acquires those
securities in accordance with subdivision (c), the broker, dealer, or
municipal securities dealer shall disclose the existence of the
financial advisory relationship in writing to each customer who
purchases those securities from that broker, dealer, or municipal
securities dealer, at or before the completion of the transaction
with the customer.

53692. In addition to any other requirement imposed by law, at
least 15 days prior to the sale of any public securities that exceed
one million dollars ($1,000,000) but do not exceed ten million
dollars ($10,000,000) at a public sale and at least five days prior
to the sale of any public securities that exceed ten million dollars
($10,000,000) at a public sale, an issuer shall publish notice of the
intention to sell the securities in a financial publication
generally circulated throughout the state or reasonably expected to
be disseminated among prospective bidders for the securities. The
notice shall include the date, time, and place of the intended sale
and the amount of the securities to be sold.