Risky Business: Understanding the Business Side of Government Bonds

Three law firms dominate the legal work that goes into issuing state and local government debt in Arizona. Near the end of the documents that describe government bond offerings to investors is a section called “relationships among the parties.” This is where potential conflicts of interest among the law firms and bond houses involved in the deal are disclosed. The Goldwater Institute analyzed the official statements in 75 recent bond sales with a total value of almost $6.8 billion to determine who profits from putting the deals together. All but one of those issues involved at least one of the three law firms. There is nothing illegal or unethical about the close relationships among the law firms, the bond houses they work for and the governments that issue the debt, as long as those relationships are disclosed and conflict-of-interest waivers are obtained.

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