TITLE

IRS Letter Aims to Spark Wachovia Yield-Burning Settlement

AUTHOR(S)
Ferris, Craig T.
PUB. DATE
June 2003
SOURCE
Bond Buyer;6/27/2003, Vol. 344 Issue 31666, p5
SOURCE TYPE
Trade Publication
DOC. TYPE
Article
ABSTRACT
The U.S. Internal Revenue Service (IRS) has sent a letter to the Ocean Township, New Jersey, Board of Education requesting the names of bondholders and the interest paid to them on $9.525 million of bonds as it steps up pressure to get Wachovia Bank to settle the yield-burning case by paying the illegal arbitrage that was earned by a predecessor securities firm. The letter, which was dated June 19, 2003 and was received by the school board, is designed to put impact on the board to pressure Wachovia to pay the IRS almost $200,000, including interest, to settle the case in which a predecessor firm sold the district open market securities that generated about $162,000 in illegal arbitrage profits that the IRS wants repaid to the government. If that were to happen, then the school board would be likely to try to protect the bondholders by reaching a settlement with the IRS and then to sue Wachovia to recover its money. That letter also came after the IRS in May said it was investigating about 70 issuers to determine whether yield burning occurred because the investment bankers involved were not cooperating.
ACCESSION #
10171009

 

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