Salt Lake Telegram | 1934-06-14 | Page 13 | Law Proposed to Force Bond Sale to State

AW P PROPOSED Roro SE B TO iTO FORCE BOND 1 SALE TO STATE 1 l. l Brokers' Brokers Profits on Issues by byS byi i Cities Excessive Says Official OfficialS 1 S f j A recommendation that Utah mu municipalities S be required by law to their bonds directly to lo the state stale offering them to toL before beCore government eon L prospective buyer was n dc Thursday b by E. E J. J Burnett chief accountant in the state auditors auditor's office recommendation was based on His Survey survey sur he made of state land board securitY holdings holdin s and which State Auditor Julius C. C Andersen said indicated indi indi- the board is paying excessive premiums for Cor some Investments The survey dealing only with munIcipal mu- mu bonds showed that the he board had hid paid premiums as high as 1861 percent Percent and revealed that the state chool funds are arc losing revenue be 4 Because the premiums must amortized Mr Burnett reported annual annual an an- nual yield on Such uch investments is the theIr cut down and consequently Ir funds which receive elve interest on land board investments lose rev- rev I Mr Burnett recommended legislation legislation legislation legisla legisla- tion enlarging the present law reQuiring requiring re- re Quiring municipalities to offer oHer new issues first to the state industrial commission to la include a direct offerIng offer offer- fing ing to the land board and state board of loan commissioners as well it J Mr Burnett showed that in the last six years there was one land purchase ref of worth of bonds with an ani i attendant premium o of 1322 per cent ln one case he reported the state paid a premium of oC 1525 per cent for forIan forJan foran Jan Ian an Ogden issue while the city got 98 iper 1 per cent of the par value indicating that 1725 per cent of the par value went ent to the broker handling the deal K In ln other cases he reported brokers bandling handling the issue put up no money paying the municipality after the tate had made the purchase Mr Mr Burnett said s in his opinion 4 per cent was enough premium 2 per percent percent percent cent for tor printing and legal costs and 2 per cent commission He cited one instance in which the theland land board pai paid 7 for tor an L issue ue jI pf f for which the issuing municipality municipality mu mu- received I In such vases tases he said said- there were no market changes since the bonds were ere purchased a few ew days das after they y were issued