The role of bond counsel originated in the 19th century when litigation over bond issues often resulted in judicial determinations that the bonds had not been issued in accordance with the law and were therefore invalid. Defects in the proceedings included a lack of public purpose, a violation of debt limitations and an absence of proper approval by the electorate. As a result, investors began to demand the presence of bond counsel in public financings to oversee the process and to opine on bond validity. Today, bond counsel also often opines on the exemption of interest on the securities from state and federal taxation.
Public issuers often hire an investment bank to assist in structuring and selling its bond issues. Over the years, bond transactions have become more complex and sophisticated. The underwriter can no longer depend on price and distribution alone to meet the needs of the public issuer. With the increased complexity of public finance transactions has also come increased concern about underwriters’ obligations. A number of regulatory initiatives have focused on the disclosure process in public finance transactions. Underwriters’ counsel assists the underwriters in meeting their responsibility in the provision of full and fair disclosure to investors and the prevention of fraudulent, deceptive and manipulative acts or omissions.
Carlile Patchen & Murphy offers state and local issuers and underwriters the combination of thorough technical knowledge of public finance law, creativity in structuring transactions, a positive attitude toward making a deal and a practical knowledge of Ohio politics.