SEDA Expert Arthur Miller was retained to provide expert guidance on the municipal bond market in a FINRA arbitration.
THE CASE
The claim was brought against a major municipal bond investment bank and some of its principals for misrepresentations, omissions, and lack of suitability in connection with the purchase of tax-exempt bonds issued as part of a bond offering relating to the sale of the claimant’s assets to a non-profit entity.
The claimant alleged the investment bank misrepresented the fair or reasonable value of the bonds. Mr. Miller provided extensive guidance on the municipal bond market generally and the tax-exempt bond market specifically. He also provided expertise on investment banking practices in municipal finance, the unique transaction and financing structures utilized in municipal finance in the sale of assets to non-profit entities, and the specific rules of the Municipal Securities Rulemaking Board (MSRB).
In the arbitration, the respondents took the position (among others) that, as the seller of the assets involved as well as the purchaser of a portion of the bonds issued to finance the sale, the claimant was a “sophisticated investor,” to which the respondents owed substantially fewer duties than would otherwise be the case, and had no resulting financial liability.
THE EXPERTS' ROLE
SEDA Expert Arthur Miller guided counsel for the claimants through the unique aspects of the transaction and the municipal market, the definition of a sophisticated investor under the MRSB rules, the duties owed by a broker-dealer to sophisticated investors and other investors, and how those rules would apply to the claimant in the context of the arbitration.
THE RESULT
Assisted by Mr. Miller’s input and guidance, counsel for the claimant reached a favorable settlement prior to the commencement of the hearing.
EXPERT INVOLVED
Arthur Miller
Arthur Miller has over 43 years of experience in public finance and municipal bonds serving as Managing Director and Co-Head of Public Finance Strategies & Analytics Groups at Goldman Sachs. He covered leading roles at industry organizations including Vice Chair and Member of the Board of Directors at the Municipal Securities Rulemaking Board. He currently acts as an Arbitrator at FINRA.
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