S.E.C. Charges Alabama Mayor In Bond Case

Filed at 2:52 p.m. ET

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission on Wednesday said it has charged the mayor of Birmingham, Alabama, and two of his friends in connection with an undisclosed payment scheme in municipal bond deals.

The SEC said the chairman of Alabama investment bank Blount Parrish & Co made more than $156,000 in undisclosed payments to Mayor Larry Langford related to municipal bond offerings and swap agreements Langford directed on behalf of Jefferson County, Alabama.

Blount Parrish, which reaped millions of dollars in fees from the deals, and its chairman, William Blount, were also charged, the SEC said.

Debt-laden Jefferson County has recently been delaying debt payments as it works on a plan to avoid what could become the largest U.S. municipal bankruptcy.

The countys troubles started when the credit crunch stemming from nationwide subprime mortgage problems spread into the municipal bond market.

Neither a spokeswoman for Langford nor his lawyer were immediately available to comment on the SEC action.

Langford was president of the Jefferson County Commission until last year.

The SEC said it is seeking financial penalties against the defendants as well as disgorgement of gains.

In its complaint, the SEC said Langford selected Blount Parrish to participate in every Jefferson County municipal bond offering and security-based swap agreement transaction in 2003 and 2004. The deals yielded more than $6.7 million in fees for the firm.

Before Langfords election to the county commission, Blount Parrish had not received any municipal bond business from Jefferson County for years, the SEC said.

The agency said that over the course of two years, Langfords friend, William Blount, paid Langford more than $156,000 in undisclosed cash and benefits.

Langford and Blount hid the payment scheme by using their longtime friend, Albert LaPierre, an Alabama registered political lobbyist, as a conduit, the SEC said.

An attorney for LaPierre did not immediately have a comment on the charges.

An attorney for Blount and Blount Parrish said they vigorously deny the allegations and plan to defend against the charges.

"These defendants engaged in misconduct that defrauded Jefferson County and municipal bond investors," said David Nelson, director of the SECs Miami office, in a statement.

"By failing to disclose the payment scheme, they deprived Jefferson County and investors of an objective and impartial bond underwriting process and swap agreement negotiations."

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