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Bond Accountability Commission 2 Recommendations Page 6

Transactional Execution

Financial Advisors’ Employment & Services CMSD receives financial advice from two firms—Fifth Third Securities, Inc. and Blaylock Robert Van, LLC (succeeding to SBK-Brooks Investment Corp.)—and experienced individuals within those firms. CMSD also receives Bond Counsel advice from Squire, Sanders & Dempsey, LLP and experienced personnel within that firm. CMSD’s Financial Advisors appear to have served independently of CMSD’s underwriters in the Issue 14 transactions. Independent financial advice is an important asset of which some issuers fail to avail themselves. We endorse it as an important way to protect the interests of the District and its taxpayers. Underwriters are adversaries to the interests of issuers in the issuance and sale of municipal securities, even when the underwriters are well-intentioned. Among other things, CMSD wants to receive the lowest borrowing cost and most flexible terms, while underwriters, representing their own interests and the interests of investors, want the highest investment returns and the strictest terms.3 CMSD needs to continue to have the full benefit of qualified independent financial advice that focuses solely upon CMSD’s best interests.                                                             3

See Rule 2320(a)(1) of the Financial Industry Regulatory Authority (“FINRA”), which states that dealers (including underwriters) must act for the benefit of “customers” (i.e., investors), as follows— In any transaction for or with a customer … [the dealer] shall use reasonable diligence to ascertain the best market for the subject security and buy or sell in such market so that the resultant price to the customer is as favorable as possible under prevailing market conditions. [Emphasis added.]

BAC2 Recomendations Final 04062010