40A:2-38. Prohibited agreements

In the issuance or sale of obligations, it shall be unlawful for the governing body or any member thereof or any official:

a. To pay or agree to pay, directly or indirectly, any bonus, commission, fee or other compensation or consideration for the issuance or for the sale of obligations, and any amount so paid may be recovered for the local unit;

b. To make any agreement with any purchaser or bidder, or his representative, regarding the deposit or disposition or any moneys received or to be received from such sale and every such agreement shall be void;

c. To make any agreement pertaining to the sale of obligations which contains provisions as to any other matter, and such sale and any such agreement shall be void;

d. To make any agreement or "service contract" with respect to publication of notice of sale and printing of bonds or notes, the providing of a legal opinion or for any of such services, whether or not accompanied by an offer to bid for or purchase obligations. Any such agreement or contract shall be void, and any amount so paid may be recovered for the local unit; except, however, agreements made directly with a newspaper, bond printer or an attorney licensed to practice law in the State in which he has his office.

A municipal bond dealer, banker, or financial expert may be engaged or employed as a financial advisor to provide financial services in connection with the sale of obligations, including the preparation of a bidding circular or prospectus. The financial advisor may bid for obligations offered by the issuer at public sale. The financial advisor shall not purchase any such obligations at any private sale, but any such purchase shall not affect the validity of the obligations, and the local unit shall recover any compensation and profit resulting therefrom to such financial advisor.

L.1960, c. 169, s. 1, eff. Jan. 1, 1962. Amended by L.1981, c. 268, s. 1, eff. Aug. 24, 1981.