SEC Sues Birmingham Mayor

Larry Langford charged with taking undisclosed payments

Birmingham, Alabama, Mayor Larry Langford was sued by the Securities and Exchange Commission Wednesday for allegedly accepting more than $156,000 from a friend whose investment banking company made millions from fees on Jefferson County swaps and bond transactions.

Langford has denied any wrongdoing. “None of it’s true,” Langford, 60, said at a press conference Wednesday.

The SEC’s complaint alleges that while Langford was president of the Jefferson County Commission in Alabama he accepted more than $156,000 in undisclosed cash and benefits over the course of two years from William Blount, the chairman of Blount Parrish & Co., a Montgomery-based broker-dealer.

Langford contends that he took a loan from Blount, whom he has known for 30 years. “It’s all political,” Langford said of the lawsuit. “At the end of the day it will be revealed for exactly what it is,” he added.

The SEC contends that Blount Parrish earned more than $6.7 million in fees between 2003 and 2004. These gains were a direct result, according to the SEC press release, of Langford selecting Blount Parrish to participate in every Jefferson County municipal bond offering and security-based swap agreement transaction during that period. Langford and Blount are accused of enlisting Albert LaPierre, their longtime friend and an Alabama registered lobbyist, to conceal the payments. Along with Langford and Blount, LaPierre is also named in the civil suit.

In a statement, David Nelson, director of the SEC’s Miami Regional Office, said, “These defendants engaged in misconduct that defrauded Jefferson County and municipal bond investors. 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.”

The SEC-issued bulletin explains that a swap agreement is a financial derivative instrument in which an issuer—in this case Jefferson County—agrees to exchange periodic interest rate payments on a specified principal amount of debt with a counterparty. A security-based swap agreement is a type of swap agreement in which a material term is based on the price, yield, value, or volatility of any security, group, or index of securities. This case marks the first time the SEC has taken enforcement action involving security-based swap agreements.

Langford served on the Jefferson County Commission from 2002 to 2007. During his terms as commissioner, Langford was on the board of the Birmingham-Jefferson County Civic Center, the Metropolitan Development Board, and the Jefferson County Workforce Investment Board. He was elected mayor of Birmingham in October 2007.

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