Regulators get 2-year-college records
BIRMINGHAM (AP) — The Securities and Exchange Commission is reviewing two-year college records relating to an investment bank that handled bond business for colleges and has ties to the system's former finance director.
SEC lawyers requested records in May concerning Merchant Capital of Montgomery and trips college system officials took to New York City from 2002 to 2005.
Chancellor Bradley Byrne said commission officials had an August interview with Debbie Dahl, who was fired as the system's vice chancellor for finance last month.
"She was pretty matter-of-fact about it," Byrne said. "She said it wasn't a very big deal."
System records show more than two-thirds — $135 million — of two-year college bond business went to Merchant Capital after Dahl's office took over all post-secondary education bond business in 1998.
Dahl's brother, Ken Funderburk, is an officer with Merchant Capital.
The SEC has characterized its investigation of two-year college bonds as "an informal inquiry," according to a May 17 letter sent to system officials.
"This inquiry is confidential and should not be construed as an indication by the commission or its staff that any violation of law has occurred, nor as an adverse reflection upon any person, entity or security," the letter states.
Mike Dunn, who serves as Merchant Capital's lead banker, declined to discuss the inquiry and efforts to reach Dahl and Funderburk for comment failed, the newspaper said.
Don Edwards, the system's vice chancellor for operations, said SEC lawyers want to know more about who paid for the New York City trips taken by college officials.
Wallace State Community College President Vicki Hawsey said she went on one trip in late 2004 after being asked to join the group to meet with bond-rating agencies and others in the municipal finance business.
The system was seeking a broad bond rating for all colleges, and Wallace State in Hanceville was working on a building project, Hawsey said. "I didn't plan it. All I did was what I was asked to do," she said.
She said she didn't know who paid for the trip. "I assumed postsecondary did. I just know my college didn't," she told the News.
Also on that trip were Dahl, Southern Union State Community College President Susan Salatto, and then-Chancellor Roy Johnson, Edwards said.
Regulators asked for records relating to trips "taken by any Alabama College System officials or any family members of said officials to New York, New York to meet with representatives of a bond-rating agency or agencies ... or bond insurers."
In addition to records requested for the bond trips, the SEC also requested records of reimbursements paid to and by the college system for the trips.
Some of the state's two-year colleges have been the focus of a joint state and federal investigation dating back to the summer of 2004.
Information from: The Birmingham News
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