Maverick in Munis Claims Overpricing

NEW YORK -- The operator of a Web site that red-flags price disparities among the $9.5 billion or so of municipal bonds traded daily in the secondary market is awaiting a response from dealers to a lawsuit he has brought challenging some of their pricing practices.

Among the claims in the suit is that the muni-bond market is "opaque," meaning that market prices are "clear and known" to dealers, but not to the general public, presenting opportunities for overcharging.

The Web site, municipalbonds.com, says "price transparency has not been available" in munis, even though -bond dealers are required to report daily transactions to a self-regulator, the Municipal Securities Rulemaking Board. The MSRB releases prices for actively traded bonds -- those that trade three times or more -- the next day. Other prices are released a week after the trade.

But that isn't doing the job, said Kevin Olson, who runs the Web site. Mr. Olson, 40 years old, formerly worked on several West Coast municipal-bond trading and underwriting desks. Last month, he filed a lawsuit against nine large municipal-bond dealers, saying they set unfair prices for municipal bonds and took excessive markups and fees.