(a) In the case of bonds issued by an authority to acquire local obligations, the offering documents for the bonds shall clearly delineate investment criteria for the local obligations to be acquired. The investment criteria shall specify the types of local obligations eligible for acquisition by the authority, as well as minimum standards of creditworthiness for these obligations.
(b) No financial advisor, investment advisor, underwriter, broker, dealer, or municipal securities dealer shall recommend the purchase, sale, or exchange of a municipal security to an authority unless that financial advisor, investment advisor, underwriter, broker, dealer, or municipal securities dealer has reasonable grounds to believe and does believe that the recommendation is suitable for the authority in light of the authority’s investment criteria and responsibility to safeguard public funds.
(c) In the case of bonds issued by an authority to acquire local obligations, the underwriter of the bonds, and the financial advisor and investment advisor to the authority, shall not sell to the authority any security or obligation issued by a state or local government from its dealer inventory or that it underwrote or otherwise placed on behalf of another client.
(Added by Stats. 1995, Ch. 229, Sec. 2. Effective July 31, 1995.)