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ESCAMBIA COUNTY CORRESPONDENCE RE: DERIVATIVES <br />LITIGATION <br />The Board reviewed a letter of May 15, 1995: <br />• 'V ` W OF c..UUN i 1 :..V1�11�1IJJIV1rl.-1lJ <br />NASCAT ESCAMBIA COUNTY, FLORIDA <br />510 C Street, N.E. <br />Washington, DC 20002 1MI. % 223 PALAFOX PLACE <br />{i J P.O. BOX 1591 <br />s> ENSACOLA. FLORIDA 32597.1591 <br />D.stnel Tie <br />vnoR <br />Dot J. �utn <br />Dnsnel Tsuss <br />TOM 9ANJAWN <br />Doi"" Few <br />dOHNNv READM <br />Dist"Cl ins <br />Mr. Richard N. Bird <br />Board Of Commissioners <br />1840 25th Street, N-158 <br />Vero Beach, FL 32960-3365 <br />Dear Mr. Richard N. Bird: <br />TEL. (904) 436-5783 <br />(SUNCOM) 582-5783 <br />TELEFAX (904) 436-5802 <br />May 15, 1995 <br />Commissioners r <br />Administrator <br />Attorney, _ \ <br />PersorinfS <br />Public lftt <br />Cc rill in 11�' <br />UINIUaz _ <br />Rsincz <br />_OM+k / <br />Emer.. Sere <br />Risk Mgt. �- <br />Other <br />As chairman of a county commission concerned with public investment funds, I want to bring <br />to your attention a matter that I believe should be of significant concern to county officials across <br />the nation. <br />Right now. the U.S. Senate is considering legislation - S. 240 (the Dodd-Domenici bill) - that <br />would effectively prohibit investors who own stocks, bonds, or other securities from using the <br />federal court,. to recover their money if they are defrauded. If passed, this legislation would have <br />grave consequences should any of the investment or retirement funds your county oversees suffer <br />losses due to fraud in the future. The U.S. House of Representatives already has passed similar <br />harmful legislation (H.R. 1058). <br />You are nrnbabls familiar with the situation in Orange County, California, where a 51.7 billion <br />Joss in investments in derivative securities caused one of the wealthiest communities in the country <br />to go bankrupt in a matter of months. Orange County has sued Merrill Lynch for securities fraud, an <br />action that in all likelihood could not have proceeded had S. 240 been the -IOW- Unfortunately, Orange <br />County is not alone. Already. 40 communities and public institutions across the country have reported <br />derivatives losses totaling over 53 billion (see enclosed list). This is only one, although a critical, <br />reason m -h%- legislation like S. 240 is dangerous for the nation. <br />My own county of Escambia, in the Florida panhandle, recently suffered $25 million in losses <br />due to derl,%vtives. Believe me, I certainly want to maintain the ability to fully pursue securities <br />dealers. should we learn that they perpetrated a fraud on the taxpayers otEscambia. <br />Many important governmental, private, and public interest groups are opposed to legislation <br />that would make securities suits by defrauded investors difficult, if not impossible. These include: <br />the Securities and Exchange Commission; the North American Securities Administrators Association <br />(representing the 50 state securities regulators); the U.S. Conference of Mayors; the Government <br />Finance Officers Association: the Fraternal Order of Police; major labor groups (AFL-CIO, <br />Teamsters, AFSCME); every major consumer group in the country (Consumer Federation of <br />America, Consumers Union, Citizen Action, etc.); and many groups of senior citizens (AARP, <br />National Council of Senior Citizens, Gray Panthers). - <br />BOOK 95 P,, cF 6,83 <br />JULY 119 1995 39 <br />