Facebook Post from Hemet Politics Group between Howard Feigenbaum (Treasurer Candidat) & several voters


This post was taken from the Facebook group “Hemet Politics” and is a questions & answer between candidate Howard Feigenbaum and several local residents who have an interest in what is happening in terms of investments in the City of Hemet. 

Hoard Feigenbaum

Hello. I'm a candidate for Treasurer.  AG Sheppard raised a concern about my having a broker's license and a possible conflict of interest.  After 31 years of service, I am retiring and withdrawing my firm's registration--whether or not I am elected. Even if I weren't retiring, there would be no conflict. My firm isn't registered with the Federal Reserve or licensed to trade in Certificates of Deposit. Above all, as a matter of propriety and state law, fair dealing requires that I not benefit from the office.
AG raised a concern about a lawsuit in which my firm was involved and a you tube video showing an oral argument before the 9th Circuit. I urge everyone to watch the video.  Small broker/dealer firms have been forced out of business because of a SEC interpretation of a Securities Exchange Act rule. The rule said that a firm need not file an audited annual report if the firm does not hold customer securities or money. An un-audited annual report was sufficient.

The SEC nullified the rule through interpretation and required an audited report prepared by a newly-created public agency. Specialized accountants registered with the agency charge $10,000 to $20,000 to prepare such an audit, a fee difficult for small firms to afford.

I challenged the interpretation. On appeal to the 9th Circuit, the Court found in my favor and remanded the case to the SEC for further consideration of my arguments.

This case was a testament to government regulation strangling small businesses. Large firms have no problem paying the exorbitant fees.  Sometimes you have to stand up for your right to exist, especially in the face of unfair treatment. 

I want to add that sometimes people draw conclusions that are unfounded because they have limited knowledge. I hope this post adds clarification.
Howard F

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Howard Feigenbaum for Treasurer - City of Hemet, CA - 2020

Howard Feigenbaum for Treasurer - City of Hemet, CA - 2020

  • Pat Gregory Have you ever addressed any issues the city had with its investment policy?
  • Howard FeigenbaumAuthor I've reviewed the City's investment portfolio under the control of the Treasurer and found that it is in compliance with California Government Code Section 53600 in terms of safety and liquidity. And that the Treasurer has met the fiduciary requirements of the prudent investor standard in Section 53600.3. In the future, I would be concerned about
  • Howard FeigenbaumAuthor any attempt to substantially increase revenue through pursuit of high yields. In a resume posted on San Jacinto and Hemet Valley News, I recounted the 1994 bankruptcy of Orange County

Pat Gregory Did you also investigate whether or not there was proper oversight of the portfolio by someone other than the treasurer?

  • Pat Gregory Also it seems that you were involved in litigation regarding proper auditing practices. Did you ever investigate the possibility of a necessity for the city to have an audit of the city’s portfolio? As an interested taxpayer wouldn’t at least one audit be required?
  • Howard FeigenbaumAuthor Pat, Audits are a usual and customary part of the financial industry. I have no objection to audits and have filed them for thirty-one years. The dispute my firm was involved in did not have to do with auditing practices. The dispute was over a printed rule in the Exchange Act and an interpretation of that rule by the regulating agency. In fact, the agency had improperly promulgated the interpretation as an informal rule when they should have used formal rule-making procedures that required public comment and agency response. As a result of the litigation, the agency complied with the formal rule-making requirement.  o   

Pat Gregory Howard Feigenbaum Thank you for that information. However It is my understanding that the City’s investments have never been audited. I was looking for your input, with your experience with audit procedures, if you ever addressed this issue with the city. Also you state that you believe the city is in compliance with the Govt code cited above, but it is my understanding that the current treasurer invested in unrated investments and some with terms longer than 5 years which appear to violate the referenced code?

  • Howard FeigenbaumAuthor Pat, the City has an audit every year conducted by an independent auditor, The Pun Group. The Comprehensive Annual Financial Reports are available for anyone to see on the City website. The latest one, for the fiscal year ending June 30, 2019, has Notes to the Basic Financial Statement, page 63 and following which disclose the holdings of fiduciary accounts overseen by the Treasurer. There are investments authorized under the government code and there are investments authorized by debt agreements. Debt agreements are governed by the provisions of the agreement and not by the CA Government Code. The specific investment categories are listed. There doesn't appear to be any investments that are unauthorized. The Government Code also requires banks to secure the City's deposits by pledging securities as collateral, in addition to FDIC guarantees. The auditor states that the City has not waived the collateral requirement. The collateral by law is greater than the amount of the deposit.

Pat Gregory So you are saying that you believe the annual CAFR is an actual audit of the city’s investment portfolio?