RESOLUTION NO. 'J17 A RESOLUTION OF THE CITY OF BONNEY LAKE, PIERCE COUNTY, WASHINGTON, AUTHORIZING THE CITY ATTORNEY TO INVOKE BINDING ARBITRATION IN THE CITY'S DISPUTE WITH SMITH BARNEY SHEARSON, INC. REGARDING CITY INVESTMENTS. WHEREAS, the City is currently involved in a dispute with Smith Barney Shearson, Inc. ("Smith Barney") arising out of City investments of water and sewer department operating funds in Federal National Mortgage Association Real Estate Mortgage Investment Conduit ("FNMA REMIC") Pass Through Certificates; and, WHEREAS, the City believes that Smith Barney's recommendation of such investments to the City was improper; and WHEREAS, the City believes that Smith Barney should be required to compensate the City for the sale of such investments at a loss; and WHEREAS, attempts to negotiate a settlement of this dispute have to date been unsuccessful; and, WHEREAS, the Client Agreement between the City and Smith Barney provides for mandatory arbitration of all controversies arising thereunder; and, WHEREAS, the City believes that mandatory arbitration is an appropriate means of achieving a timely resolution to this dispute; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BONNEY LAKE, WASHINGTON, AS FOLLOWS: The Mayor is hereby authorized to instruct the City Attorney to invoke the mandatory arbitration provision of the Client Agreement between the City and Smith Barney, and to take all further steps as appropriate in resolving the dispute between the City and Smith Barney. PASSED this tath day of A I
ATTEST: U er, City Clerk APPROVED AS TO FORM
Agenda Subject: City of Bonney Lake, Washington Council Agenda Bill (C.A.B.) Approval Form C.A.B. No.: Resolution No. 788, authorizing the Public Works Director to 98-100 sign Change Orders for Myers Road Reconstruction Project. DeQartmentiStaff Contact: Attachments: Budget ImQact: PUBLIC WORKS DIRECTOR SEE LIST BELOW Administrative Recommendation: The Community Development Committee and the Director of Public Works are recommending the City Council adopt Resolution No. 788. Background Summary: The Myers Road Reconstruction project is getting close to construction. Processing change orders for the project through the City Council will cause 2 to 3 week delays and these delays will cause substantial increases in costs. In order to keep this project from extending in to the Fall bad weather season the Director of Public Works is requesting authorization to sign change orders for the project as long as they are within the current approved budget. Attachments Community Development Committee Report dated June 2, 1998. Resolution No. 788 Attorney comments Reviewed by Council Committee: Finance Committee Reviewed by Commissions & Departments: Planning Commission (6/2/97) Park Board Public Safety Committee Civil Service Commission _x_ Community Development & Planning Hearing Examiner Committee _X_ Legal Finance Council Workshop Date( s): Planning & Comm. Dev. Police Fire Administration Approval Date to Present to Council: 06/09/98 Referred to Committee Workshop Call for Hearing Hearing Held: Tabled Until: Council Approved: Si natures: Dept. Dir.lCouncilmember Referred Back To: City Attorney
Committee Recommendation No. 1998-002 COMMUNITY DEVELOPMENT COMMITTEE DATE: June 2, 1998 ORIGINATOR: Seth Boettcher, P.E. TITLE: Director of Public Works SUBJECT: Resolution No. 788, authorizing the Public Works Director to sign Change Orders for Myers Road Reconstruction Project. ORDINANCEIRESOLUTION # No. 73 g REQUEST OR RECOMMENDATION BY ORIGINATOR: The Myers Road Reconstruction project is getting close to construction. Processing change orders for the project through the City Council will cause 2 to 3 week delays and these delays will cause substantial increases in costs. In order to keep this project from extending in to the Fall bad weather season the Director of Public Works is requesting authorization to sign change orders for the project as long as they are within the current approved budget. The Director of Public Works is recommending the Community Development Committee forward the Resolution to the City Council for approval. ISSUE AND DOCUMENTS HAVE BEEN REVIEWED AND APPROVED BY THE MAYOR AND CITY ATTORNEY: BUDGETED ITEM: TOTAL COST: (Note: If budgeted item, attach copy of budget page and identify) COMMITTEE ACTION: DISAPPROVE Leroy Eggers, Chairman Neale Duren Paul Qualey COMMITTEE COMMENTS;,,;.,, : COMMITTEE'S RECOMMENDATION TO FORWARD TO: (Circle One) CITY CLERK MAYOR CITY ATTORNEY Please schedule for Council Meeting date of: June 9,1998
ATTORNEYS AT LAW.2550 FIRST INTERSTATE CENTER 999 THIRD A VENUE : SEATTLE WASHINGTON 98104 TEL (206) 622-0203 FAX (206) 223-2003 attorneys@dionne-rorick.com DIONNE &RORICK (If/lit,? 'Ii./ (/ [Jil( t,1 \ I u...$., Salomon Smith Barney 388 Greenwich Street 19th Floor New York, New York 10013 Re: NASD Arbitration #98-01918 City of Bonney Lake v. Smith Barney Dear Mr_ Hohauser: In accordance with NASD Rule 10321, please produce the following documents and things to the undersigned, not later than 30 days after selvice of these requests upon you. For purposes of these requests, please note that "Smith Barney" is intended to include Solomon Smith Barney, Smith Barney Shearson, Shearson Lehman Brothers, and any and all corporate predecessors or successors in interest to any of the foregoing. A. Smith Barney's compliance manual or manuals in effect during the time period April, 1993- June, 1994; B. Personnel files maintained by Smith Barney for Ronald Gross and Robert Schmidt, including copies of any and all complaints against them (either internal to the company or from outside), warning or reprimand letters/memos; C. All U-4s (employment applications) and U-5s (termination notices) and NYSE RE-3s filed with respect to financial consultants Ronald Gross and Robert Schmidt subsequent to January 1, 1992; D. Any and all documents generated, sent, received or possessed by Smith Barney which relate in any way to its customer, the City of Bonney Lake, including but not limited to, the following: a. Account forms (e.g., opening account forms, customer agreement, disclosure statements); b. Smith Barney's holding pages, if any, for the City of Bonney Lake, Washington;
Page 2 c. Correspondence to or from Smith Barney relating to the City of Bonney Lake; and d. Internal notes or memoranda, phone message slips and the like relating in any way to the City of Bonney Lake. E. Smith Barney's holding pages for the following securities for the period January 1, 1993 through December 31, 1996: (l)fnma REMIC Pass Through Certificate TR 93-210, Class 21-K-Callable; DTD 11/1/93; CUSIP 3133359E5R8. Definition: Whenever the term "the disputed securities" is used in this document, it means those securities set forth in the foregoing sentence; F. Any and all documents upon which Ronald Gross and/or Robert Schmidt relied, in whole or in part, in making a recommendation to the City of Bonney Lake to invest in the disputed securities or in any FNMA REMIC security more generally; G. Your monthly and annual commission runs for all of Mr. Gross's and Mr. Schmidt's. customers' accounts for the period January 1, 1993 through December 31, 1994. The names of the customers (other than City of Bonney Lake) may be deleted, but all account numbers must be shown; H. All documents reflecting any communications between January 1, 1993 and the present, to or from any of the following, about the sales practices of, or customer complaints against, Ronald Gross, Robert Schmidt, or Smith Barney: a. Any State securities commission or other State securities regulatory agency; b. Any federal securities regulators, including but not limited to the Securities and Exchange Commission; c. Any registered securities exchange, including but not limited to the New York Stock Exchange and the American Stock Exchange; and d. The National Association of Securities Dealers or NASD Regulation, Inc.' Whenever the term "Securities Regulators" is used in this document, it means those agencies or regulators listed in H, immediately above. 1. With respect to any lawsuit, enforcement action, or other formal regulatory or administrative proceeding commenced by any Security Regulator against Smith Barney
Page 3 which involved Ronald Gross or Robert Schmidt in any way, from January 1, 1992 to the present, produce: a. All documents filed, served, or delivered to Ronald Gross or Robert Schmidt or Smith Barney (or counsel) in connection with such proceeding: b. All documents filed, served, or delivered Ronald Gross, Robert Schmidt or Smith Barney (or counsel) in connection with such proceeding; and c. All orders or correspondence issued by any Securities Regulators in connection with such proceeding. J. With respect to all written customer complaints about or against Ronald Gross or Robert Schmidt during the period January 1, 1992 through the present, produce: a. The complaint (whether in the form of a letter or a more formal document) with all exhibits, addenda, or appendices thereto; b. All written responses thereto, whether by way of correspondence or by the formal filing of a responsive document, with all exhibits, addenda, or appendices thereto; and c. All documents showing the resolution of the complaint, such as an arbitrator's decision, a court or regulatory agency order, a Settlement Agreement, a letter confirming an agreement, or the like. K. All exception reports, activity concentration printouts, or similar reports generated in connection with any account of the City of Bonney Lake; L. All research reports, analysts' reports, marketing information, internal company documents, or other written materials commenting on, or containing information relating to the disputed securities, or to FMNA REMIC securities more generally, whether or not these reports and information were known to Ronald Gross or Robert Schmidt; M. Any analysis or account reconciliation regarding the trading in Bonney Lake's account; N. All transcripts and tape recordings of an recordings of any telephone contacts with the City of Bonney Lake;
Page 4 O. All scripts provided to Ronald Gross or Robert Schmidt by Smith Barney between January 1, 1992 and December 31, 1993 for their use in placing calls to customers; P. All memoranda, handwritten or other notations, reports, or other documents of any nature whatsoever reflecting any contact by Smith Barney representatives {including Ronald Gross, Robert Schmidt and Gary Magnuson} with the City of Bonney Lake; Q. All documents identified in response to the information requests enumerated below; and R. An organizational chart for the Seattle branch office of Smith Barney and for the region within which the Seattle branch was located, for the period January 1, 1992 through June, 1994. Information Requests. In accordance with NASD Rule 32, please provide the following information not later than 30 days after service of these requests upon you: 1. Identify each Smith Barney compliance supervisor who supervised Ronald Gross and! or Robert Schmidt between January 1, 1992 through May, 1994, and state the period during which he or she was either or both of their compliance officer; 2. State the gross production and gross income for each of Ronald Gross and Robert Schmidt while employed by Smith Barney for each of the years 1992, 1993 and 1994; 3. State the income or compensation received by Smith Barney and by Ronald Gross and Robert Schmidt, individually and collectively, in connection with the purchase by the City of Bonney Lake of the disputed securities; state also from what source and pursuant to what terms the compensation was received; 4. Identify all documents which specify or describe the terms in accordance with which sales of the disputed securities would be compensated, whether to Smith Barney from the Issuer or Dealer of the securities or from Smith Barney to its employees; 5. Identify each expert witness you expect to call at any hearing in this matter, and for each such expert state: a. The person's qualifications as an expert; b. The substance of the facts and opinions to which the expert will testify;
Page 5 c. The grounds for each opinion as to which you expect the expert to testifyj and d. Produce all documents relied on, or generated by, the expert in connection with the opinions to which he or she is expected to testify. Very truly yours, DIONNE & RORICK Michael H. Rorick MHR:cdc cc: Mayor Bob Young s:\l>onlk\016\9011sdls.pld.doc