SEC May Let Borrowers Bid on Auction-Rate Securities

NEW YORK -- The Securities and Exchange Commission may let borrowers bid on their own auction-rate securities amid a surge in failed auctions that have increased debt costs for state and local governments, Bloomberg News reported Wednesday.

The SEC is preparing ”guidance'' that would allow borrowers to participate as long as they disclose “price and quantity'' information about their bids, Erik Sirri, who heads the agency's trading and markets division, said in congressional testimony Wednesday. The SEC expects to release the directive by the end of the week, he said, according to Bloomberg News.

“The guidance should remove any hesitancy on the part of broker dealers and auction agents to allow municipal issuers to bid,'' Sirri told the House Financial Services Committee, according to Bloomberg News.

-- NYSSCPA.org News Staff

Posted on 3/12/08