AUSTIN, Texas (AP) – Some attorneys and financial services firms dealing with municipal bond sales are seeking clarification of a new Texas law that requires disclosure of who is making money from government contracts.
The Texas Ethics Commission in April is expected to review concerns that the statute, which took effect Jan. 1, is confusing, the Houston Chronicle reported.
The law bars state and local governments from signing contracts unless vendors disclose their owners and others who helped facilitate or negotiate contracts that either have a value of at least $1 million or require a vote by a governing board.
“People should know where the money is going,” State Rep. Giovanni Capriglione, R-Southlake, said. “The intent – regardless of whether it’s a good or a service or a financial product – is for everyone to see who is profiting.”
The law’s reporting requirements are so broad that as many as 26,000 disclosure forms are expected to be filed by the end of the year, the newspaper reported.
Law firms and bond underwriters pushing to have the law amended by the 2017 Legislature say they support transparency in markets and the goal of the law but maintain that the new statute is confusing.
“Having a regime that is unclear, and has different firms filing the forms with different levels of information, potentially creates either an overabundance of information or not enough information,” said Leslie Norwood, managing director and associate general counsel of the Securities Industry and Financial Markets Association.
The law does not define, according to Norwood, what a contract with a value of at least $1 million means: Do all firms that work on a bond sale of at least $1 million need to disclose the information, or only those that are paid fees of at least $1 million?
Norwood told the Ethics Commission earlier this month that either businesses should be able to define what a contract with a value of at least $1 million is, or the state should define the value as the amount of fees that a firm receives.