Politics undoubtedly influence the public narrative surrounding a municipality’s slide into bankruptcy. Last week, however, the Securities and Exchange Commission served notice that public officials need to be careful of what they say. For the first time ever, the SEC charged a municipality, Harrisburg, Pennsylvania, with violations of Section 10(b) of the Exchange Act and Rule 10(b)(5) for making materially misleading statements.

While Harrisburg filed a Chapter 9 petition in October of 2011, the petition was dismissed on the grounds that the bankruptcy filing was not authorized under Pennsylvania law. Instead, a receiver was appointed to implement a “recovery plan” and take control of the city’s finances. The city remains under the control of the receiver.

Receiving Wide Coverage ...

Deriving Pleasure: Too many price quotes will increase trading costs and reduce liquidity. That is the curious (if not spurious) story megabanks successfully stuck to in lobbying financial regulators to water down a key provision of the Dodd-Frank Act aimed at governing derivatives trading. The result was a 4-to-1 vote by the Commodity Futures Trading Commission on Thursday in favor of reducing the number of price quotes buyers must seek before conducting...

Eastman Kodak Co. is seeking court permission to enter into a deal with its U.K. pension plan, an “unprecedented” settlement that lies at the heart of its reorganization proposal. Read the Daily Bankruptcy Review story here.
A decades-old whistleblower lawsuit that prompted Congress to change the law intended to expose corporate fraud on the government is still haunting the remnants of the old General Motors—and is holding up the distribution of $50 million to the bankruptcy estate’s creditors. Read the DBR story in The Wall Street Journal.
Standard & Poor’s Ratings Services placed its ratings on Ally Financial Inc. on watch for a possible upgrade, after the government-controlled auto lender entered into a plan-support agreement with its troubled mortgage subsidiary Residential Capital and the unit’s influential creditors, WSJ reports.
The Journal reports Telus Corp. it will acquire mobile-phone start-up Mobilicity for 380 million Canadian dollars ($373.6 million), highlighting the struggles new entrants to the wireless space face as they try to compete against Canada’s incumbent phone companies.

Peter Morici, an economist and professor at the Smith School of Business, University of Maryland, claims that forgiving student loan borrowers of their debts will lead only to more bad decisions.
There’s a move in Washington to do something about student loan debt. Senators propose freezing student loan interest rates. Federal agencies issue reports.  And, of course, there’s the rolling tide of bills to get private student loans rendered dischargeable in bankruptcy cases.
No wonder: not only is there more than $1 trillion in student loan debt outstanding, but people have finally woken up to the fact that a college degree doesn’t buy you a ton of access to a well-paying job.