Springfield Massachusetts has a just reveelaed scandal ... MassLive.com; which is a warnig for municipalities nationwide. As a general principal of government; public funds cannot be placed in the hands of brkerages or third parties for high-risk investment income (ie for speculation).
That activity is cistomarily dercied and prohibited as a violation of the materially controlling "prudent investor" standard which applies ot public (government) funds custodians. Further involved is the "ultra vires" factor in Springfield Massachusetts case.
In case missed, a few days ago, the Springfield Republican aand other news sources reported that the City of Springfield, in receivership with a State Fiscal Control Board; had loosed almost $13 million to a Merrill-Lynch brokerage; and that suurety-funds trustee invested those funds in high -risk venture; which risks were paramount and controlling; and the entrusted amount dropped 90% to about $1.3 million.
The little detective story now, is about how that broker got those funds; from which official; and from which suddenly discovered 'surplus city funds" source.
Sadly, the good Merrill-Lynch which may yet incufull liabiltiy for the fiasco, seems to have joined it salesmen to seek and use such 'surplus public funds' nationwide.
As Jummy Hatlo once said : "There oughta be a law!" There is in part, and if needed --these brokerage targets will be taken from the market by good US law. A triple shame with Merril-Lynch's involvement.
That activity is cistomarily dercied and prohibited as a violation of the materially controlling "prudent investor" standard which applies ot public (government) funds custodians. Further involved is the "ultra vires" factor in Springfield Massachusetts case.
In case missed, a few days ago, the Springfield Republican aand other news sources reported that the City of Springfield, in receivership with a State Fiscal Control Board; had loosed almost $13 million to a Merrill-Lynch brokerage; and that suurety-funds trustee invested those funds in high -risk venture; which risks were paramount and controlling; and the entrusted amount dropped 90% to about $1.3 million.
The little detective story now, is about how that broker got those funds; from which official; and from which suddenly discovered 'surplus city funds" source.
Sadly, the good Merrill-Lynch which may yet incufull liabiltiy for the fiasco, seems to have joined it salesmen to seek and use such 'surplus public funds' nationwide.
As Jummy Hatlo once said : "There oughta be a law!" There is in part, and if needed --these brokerage targets will be taken from the market by good US law. A triple shame with Merril-Lynch's involvement.
posted by scotty of course at 1:43 PM
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