Madison County files $400,000 claim against bond dealer, BND 9-20-11, please read, share and go on-line to comment




BY MIKE FITZGERALD, News-Democrat, Posted on Tue, Sep. 20, 2011

Madison County has filed an arbitration request to recover $400,000 lost from the sale of bonds by an Arkansas securities dealer last year.


In a claim filed with the Financial Industry Regulatory Association district office in Chicago, the lawyer for Madison County argues
the Little Rock, Ark., office of bond dealers Sterne Agee & Leach Inc. breached its legal duty by failing to supervise the activities of broker Richard Holt.


Holt sold the bonds to the county late in 2010 in violation of Treasurer Frank Miles’ own office policy, according to the complaint.


The sale should have raised “red flags” by selling federal bonds to Madison County with maturity dates of longer than 10 years, according to the complaint filed by Bruce Oakes, a partner in the St. Louis securities law firm of Oakes & Fosher LLC and the attorney for the county.


“Any time you have a client, you have a duty to them to act in their best interest and to only recommend products that are
appropriate,” Oakes said. “So longer-term bonds weren’t appropriate based on the county’s procedures.”


Holt has denied any wrongdoing, as have two employees in Madison County Treasurer Kurt Prenzler’s office, both of whom were fired by Prenzler earlier this year.


Prenzler announced in June the sale of $41 million in long-term bonds from the county investment portfolio after learning the sale
did not follow county guidelines.

The original purchase of the bonds last December breached a treasurer’s office rule that forbids the acquisition of securities with
maturity dates exceeding 10 years. The bonds in question had maturity dates of 12 and 15 years, Prenzler said.


Prenzler, after taking office as treasurer in December, said he discovered that two employees in the office had bought bonds from
Sterne Agee without competitive bidding.


A three-member panel of FIRA arbitrators will likely hear the county’s complaint in 18 months, Oakes said.


In addition to the $400,000 in damages, the county is seeking unspecified attorneys’ fees, costs, interest and punitive damages.


Contact reporter Mike Fitzgerald at or 239-2533.


© 2011 Belleville News-Democrat and news service sources.
All Rights Reserved.


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