What Are the Laws Affecting Bonds?
Bonds are defined as a written obligation by which one party promises to perform a certain act, like appearing in court, paying a financial obligation, or performing some other contractual responsibility. Bonds are also a trade instruments of debt issued by institutions to finance their activities.
In investing, a bond is a debt security in which the one who purchases a bond is, essentially, lending money to a government, municipality, corporation, federal agency or other entity who issues the bond. In return for the bond purchaser's money, the issuer provides the bond, which is nothing more than a promise to pay a specified rate of interest during the life of the bond and to repay the face value (sometimes called the “par value”) of the bond after a certain date (i.e.,when it “matures”).
There are many types of investment bonds, such as U.S. government savings bonds, municipal bonds, corporate bonds, mortgage- and asset-backed securities, federal agency securities, and foreign government bonds. Investment bonds are also sometimes called bills, notes, debt securities, or debt obligations.
In certain types of transactions, particularly construction projects, one may be required to provide a form of insurance that they will perform the duties of the contract by a certain date or in a certain way. Bonds are that insurance, and usually take the form of bid, performance, and payment bonds. Bid bonds ensure that one does not underbid a project or, if they have, that they will be able to complete the project at the price bid. Performance bonds ensure timely and accurate performance of the construction contract to the specifications. Payment bonds ensure that a contractor pays its subcontractors and materialmen and is designed to protect the owner of a project from liability to same in the event of nonpayment.
Another type of bond is the one used to guarantee that someone will return to appear in court in a criminal matter. A defendant, or the defendant's family, friends, or a professional bail bond agent, executes a document promising to forfeit a sum of money determined by the court to be sufficient to guarantee the defendant's return to court to stand trial (the “bail”). Should the defendant fail to appear, the court keeps the money secured by the bond (sometimes known as “estreature” of the bond).
Because most defendants would not be able to afford to pay their own bail, they seek assistance from a bail bondsman, or bail agent, who, for a nonrefundable fee that usually equates to about 10-20% of the bail amount, posts bail. Should the defendant fail to appear, the bail agent becomes liable for the full amount of the bail bond. If a defendant fails to appear in court when required, the court will issue a warrant for the defendant's arrest for "jumping bail," and the amount of the bond will be forfeited to the court. The bail agent is then usually authorized to track down the defendant and bring him or her back to court for criminal proceedings in order to obtain a refund of the bond. This is often accomplished through the employment of bounty hunters.
For more information about the various types of bonds, please visit the resources found below. Additionally, you may find an attorney in your area to assist you with your legal needs by visiting our Law Firms page.
Bonds Law - US
- General Obligation Bonds Law and Legal Definition
General obligation bonds are a type of municipal government bond, which is government debt issued to raise money to finance public improvements. A general obligation bond is a municipal bond backed by the credit and "taxing power" of the issuing jurisdiction, rather than the revenue from a given project. No assets are used as collateral for the bond and the bond is not dependent on revenue of any particular project for repayment.
- General Obligation Municipal Bonds
Bonds that are backed by the taxing power of a municipality are known as General Obligation or GO Bonds. The issuer raises taxes and sets the money aside to pay back principal and interest to the municipal bondholders. Taxes used for GO Bonds include: Property, Income, Sales and others.
- In Lieu of Surety Bonds - Regulations and Guidance
This regulation governs the acceptance of bonds secured by Government obligations in lieu of bonds with sureties. Persons required by Federal law to give an agency a surety bond instead may provide a bond secured by Government obligations. This regulation replaces the Treasury Circular 154.
- Investing in Bonds
Welcome to Investing In Bonds.com! Just starting out? Need to learn more about bonds or investment strategies? Browse the articles, checklists, and guides found here.
- Investment Company Act of 1940
No provision in this subchapter shall apply to, or be deemed to include, the United States, a State, or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing, or any corporation which is wholly owned directly or indirectly by any one or more of the foregoing, or any officer, agent, or employee of any of the foregoing acting as such in the course of his official duty, unless such provision makes specific reference thereto.
- IRS - Tax Exempt Bonds
Tax Exempt Bonds (TEB) provides specialized information and services to the municipal finance community, including tailored educational programs which focus on bond industry segments; pro-active education and outreach products which address non-compliance trends; and compliance programs devised to foster voluntary resolution of tax law infractions.
- Municipal Bonds - Definition
A municipal bond is a bond issued by a city or other local government, or their agencies. Potential issuers of municipal bonds include cities, counties, redevelopment agencies, school districts, publicly owned airports and seaports, and any other governmental entity (or group of governments) below the state level. Municipal bonds may be general obligations of the issuer or secured by specified revenues. Interest income received by holders of municipal bonds is often exempt from the federal income tax and from the income tax of the state in which they are issued, although municipal bonds issued for certain purposes may not be tax exempt.
- Municipal Securities Rulemaking Board (MSRB)
The MSRB makes rules regulating dealers who deal in municipal bonds, municipal notes, and other municipal securities. This web site contains useful information for municipal securities investors, dealers and the general public.
- Public Bonds
Until the mid-1970s, the municipal bond market was essentially unregulated. The market was the private preserve of a narrow circle of underwriters and lawyers who specialized in the field and the commercial banks, insurance companies and wealthy individuals who invested in the bonds.
- Sarbanes-Oxley Act of 2002
As directed by the Sarbanes-Oxley Act of 2002, the SEC is adopting rules that require conformance with specific sections of the Act. These rules require officers to certify that they are responsible for establishing, maintaining and regularly evaluating the effectiveness of the issuer's internal controls; that they have made certain disclosures to the issuer's auditors and the audit committee of the board of directors about the issuer's internal controls; and that they have included information in the issuer's quarterly and annual reports about their evaluation and whether there have been significant changes in the issuer's internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation.
- Securities Act of 1933
Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives: * require that investors receive financial and other significant information concerning securities being offered for public sale; and * prohibit deceit, misrepresentations, and other fraud in the sale of securities.
- Securities and Exchange Commission - Investment Advisers Act of 1940
- Securities Exchange Act of 1934
With this Act, Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations (SROs). The various stock exchanges, such as the New York Stock Exchange, and American Stock Exchange are SROs. The National Association of Securities Dealers, which operates the NASDAQ system, is also an SRO.
- Trust Indenture Act of 1939
These interpretations replace the Trust Indenture Act of 1939 interpretations in the July 1997 Manual of Publicly Available Telephone Interpretations and the March 1999 Supplement to the Manual of Publicly Available Telephone Interpretations and the November 2000 Current Issues and Rulemaking Projects Outline. Some of the interpretations included herein were originally included in the Manual of Publicly Available Telephone Interpretations (as supplemented), and have been revised in some cases. The bracketed date following each interpretation is the latest date of publication or revision.
- US Code, Title 31, Sections 9304-9308
Authorizing the acceptance of corporate surety companies on bonds given to the United States.
- US Department of Commerce - Economic Development Administration
The Economic Development Administration (EDA) was established under the Public Works and Economic Development Act of 1965 (42 U.S.C. § 3121), as amended, to generate jobs, help retain existing jobs, and stimulate industrial and commercial growth in economically distressed areas of the United States. EDA assistance is available to rural and urban areas of the Nation experiencing high unemployment, low income, or other severe economic distress.
- US Department of the Treasury
The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States. The Department is responsible for a wide range of activities such as advising the President on economic and financial issues, encouraging sustainable economic growth, and fostering improved governance in financial institutions. The Department of the Treasury operates and maintains systems that are critical to the nation's financial infrastructure, such as the production of coin and currency, the disbursement of payments to the American public, revenue collection, and the borrowing of funds necessary to run the federal government.
Bonds Law - Europe
- European Bond Market
The currently healthy European bond market and an increase, particularly in the issuance of corporate bonds, have caused investors and issuers to make greater profit. The secondary bond market's high level of liquidity has also contributed to profits made and, at present, primary and secondary bond markets are merging at an increasing rate. Due to the recent financial unification in Europe, the market for sovereign and private sector bonds are being regarded as one entity.
- European Commission - The Bond Market
Since 1999 the Directorate-General for Economic and Financial Affairs has produced monthly and quarterly reports on the euro-denominated bond markets. They provide the Commission Services and the interested public with regular insights on the progress of the development of an integrated bond market for Europe.
- European Covered Bond Council (ECBC)
The European Covered Bond Council (ECBC) is a platform for covered bond market participants which brings together covered bond issuers, analysts, investment bankers, rating agencies and a wide range of interested market participants. It is the voice of the European covered bond industry.
- The Regulated Covered Bonds Regulations 2008 - UK
These Regulations may be cited as the Regulated Covered Bonds Regulations 2008 and come into force on 6th March 2008.
Bonds Law - International
- Forbes Investments
According to Forbes.com, the Web site is among the most trusted resources for senior business executives, providing them the real-time reporting, uncompromising commentary, concise analysis, relevant tools and community they need to succeed at work, profit from investing and have fun with the rewards of winning.
- Rules for the Admission of International Bonds to Trading on the SIX Swiss Exchange
These rules are intended to ensure market transparency and monitoring of trading in international bonds.
- The Munich Personal RePEc Archive (MPRA)
The Munich Personal RePEc Archive (MPRA) is an initiative by economists of the RePEc network from different countries and runs under the responsibility of the Munich University Library Geschwister-Scholl-Platz 1 D-80539 Munich Germany
Organizations Related to Bonds Law
- Ambac Financial Group, Inc
Ambac Financial Group, Inc. is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac's principal operating subsidiary, Ambac Assurance Corporation, a guarantor of public finance and structured finance obligations. The Ambac Assurance financial guarantee is an unconditional and irrevocable pledge that investors will receive principal and interest payments in full and on time should the issuer of an Ambac-insured security default. Our valuable financial guarantee reduces financing costs for issuers, facilitates the structuring and distribution of securities by investment bankers and improves liquidity for investors.
- Bloomberg - Bonds
- Electronic Municipal Market Access (EMMA)
The Electronic Municipal Market Access (EMMA) website was established to increase the broad comprehensive access to vital disclosure and transparency information in the municipal securities market. EMMA provides investors with key information about municipal securities, free of charge. The information on EMMA is presented in a manner specifically tailored for retail, non-professional investors who may not be experts in financial or investing matters.
- European Securities Services Forum (ESSF)
The objective of The European Securities Services Forum (ESSF) is a single integrated post trading system for securities transactions in Europe achieved through harmonisation, standardisation, and consolidation as well as through supporting and enabling regulation. ESSF acts as an agent of change, providing solutions in the clearing, settlement, and custody space to reduce costs and risks of market participants. It represents the views and positions of its members toward public-sector authorities and central banks at both European and national levels. On issues of common interest it cooperates with SIFMA Operations Committees in the US and in Asia.
- Investing in Bonds
Geared toward many types of investors--from beginners to experienced equity investors who are new to bonds to sophisticated bond investors--Investinginbonds.com is a unique source of bond price information and includes a wide variety of market data, news, commentary and information about bonds. The site has been ranked as a top investor site for bonds by Money, CNBC, Forbes and others and is continually enhanced and updated with new data, information and features.
- Municipal Bonds
Premier site for municipal bond investors.
- National Association of Bond Lawyers (NABL)
The National Association of Bond Lawyers was incorporated as an Illinois non-profit corporation on February 5, 1979, for the purposes of educating its members and others in the law relating to state and municipal bonds and other obligations, providing a forum for the exchange of ideas as to law and practice, improving the state of the art in the field, providing advice and comment at the federal, state and local levels with respect to legislation, regulations, rulings and other action, or proposals therefore, affecting state and municipal obligations, and providing advice and comment with regard to state and municipal obligations in proceedings before courts and administrative bodies through briefs and memoranda as a friend of the court or agency.
- Securities Industry and Financial Market Association (SIFMA)
SIFMA is a 501(c)(6) organization that represents the shared interests of participants in the global financial markets. SIFMA members include international securities firms, US-registered broker-dealers and asset managers. Member participation is the very core of who we are and the key to our effectiveness.
- US Securities and Exchange Commission
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever. As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation.
Publications Related to Bonds Law
- D2D - US Savings Bonds Publications
D2D Fund seeks to expand access to financial services, especially asset building opportunities, for low-income families by creating, testing and deploying innovative financial products and services. D2D works with the financial services industry, national non-profit groups, grassroots community agencies, and public policy organizations to generate promising ideas, pilot test systems and programs, build awareness of the needs and potential of low-income communities, and advocate progressive social and economic policy.
- NYSE Euronext - Bonds - Publications
NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V., was launched on April 4, 2007. NYSE Euronext (NYSE/New York and Euronext/Paris: NYX) operates the world ' s largest and most liquid exchange group and offers the most diverse array of financial products and services. NYSE Euronext, which brings together six cash equities exchanges in seven countries and eight derivatives exchanges, is a world leader for listings, trading in cash equities, equity and interest rate derivatives, bonds and the distribution of market data.
- Oxford Review of Economic Policy
The Oxford Review of Economic Policy is a refereed journal which is published quarterly. Each issue concentrates on a current theme in economic policy, with a balance between macro- and microeconomics, and comprises an assessment and a number of articles. It gives a valuable appraisal of economic policies worldwide. While the analysis is challenging and at the forefront of current thinking, articles are presented in non-technical language to make them readily accessible to all readers. The Oxford Review is aimed at a wide audience including government, business and policy-makers, as well as academics and students.
Articles on HG.org Related to Bonds Law
- Individual Investors Can Seek to Recover Losses through FINRA ArbitrationFor individual investors, the Financial Industry Regulatory Authority’s (FINRA) arbitration process provides an opportunity to recover fraudulent investment losses without going to court.
- Beware of Investment Advisors with Exaggerated CredentialsWhen choosing an investment advisor to help grow your nest egg or investment portfolio, you need to choose carefully. You have a lot to lose, and if you choose an inexperienced or untrustworthy advisor, you could find yourself in the position of needing to take legal action in order to recover fraudulent investment losses.
- How to Recognize Investment FraudThere are various forms of fraud that plague the world in terms of damage to systems, financial gain, personal injury and many other issues as well. These schemes are often concocted by individuals that are attempting to rob a person or company of hard-earned money or benefits in order to gain personally from these.
- SEC v. Dawn J. Bennett: From “Financial Myth Busting” To “Busted”Last fall, the SEC initiated disciplinary proceedings against financial advisor and self-proclaimed “Financial Myth Buster” Dawn Bennett, accusing her of publicly inflating her client assets under management (or “AUM”) and exaggerating her investment returns.
- SEC Halts Ash Narayan from Defrauding RGT ClientsThe Securities and Exchange Commission (“SEC”) announced that it obtained a court ordered “freeze” of the assets of three individuals, including Ash Narayan, formerly of RGT Wealth Advisors, who, the SEC alleges, siphoned millions of dollars from the accounts he managed at RGT for professional athletes and others while he was the manager of RGT Wealth Advisor’s Orange County, California office.
- FINRA Submits Proposed Rule Changes to Clarify Offsetting AwardsFINRA has recently filed proposed rule changes that provide much-needed clarification to how arbitration awards resulting in both sides paying money should be handled.
- SEC Whistleblower ProgramIn 2010, Congress implemented a new act that provides for monetary incentives for whistleblowers who report Securities and Exchange Commission violations. Whistleblowers are individuals with important information about the illegal acts of others.
- Non-Traded REITs: Great for Brokers, Not for ClientsFINRA, the Financial Industry Regulatory Authority, filed a complaint against VFG Securities, Inc., a small broker-dealer that allegedly generated almost 95% of its annual revenue from selling non-publicly traded REITs and other illiquid investments to its clients.
- Transitioning Broker Alert - FINRA Adopts New Comp Disclosure RuleThe Securities and Exchange Commission approved last week a new rule proposed by FINRA, the Financial Industry Regulatory Authority, which requires brokers departing one broker dealer for another, to send “educational information” to clients about their move to another firm and the financial compensation and incentives they will receive from the new firm for making the move.
- SEC Fiduciary Rule Proposal to Potentially Differ from DOL’sCalling all financial advisors – time to grab your compasses and brush up on your map-reading skills. As if the path to confirmation of the Department of Labor (DOL) fiduciary rule were not controversy-ridden enough, according to Investment News, SEC Chairwoman Mary Jo White announced this week the SEC may propose its own rule that “may not mesh perfectly” with the DOL’s.
- All Banking and Finance Law Articles
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