On Tuesday, the House voted 411-to-8 to approve the bill with only 2 Republicans voting against the bill, despite criticism from GOP leaders. In the Senate, Democrats predict they, too, will have the votes to pass the measure because few lawmakers want to go home to explain a vote against a measure whose title is the Honest Leadership and Open Government Act.

Still, House Republican leaders called the bill a "hollow shell of reform" and complained that they had been blocked from any role in drafting final language, which was released Monday.

"The legislation is far from perfect, but the fact that they were able, finally, after all these efforts, to get it together to do this is highly significant," says Norman Ornstein, a senior fellow at the American Enterprise Institute in Washington and a longtime critic of congressional ethics.

The House and Senate have each already voted some version of ethics and lobby reform. In the House, some reforms were adopted as rules, during the first 100 hours of the new Congress. But reformers say it's essential that the new standards be passed as law in both the chambers.

"There was a strong temptation on the part of many to say, 'We've done this, let's move past it,'" says Mr. Ornstein. It's significant that much of the drive to pass a new law came from the former and current chairs of the Democratic Congressional Campaign Committee, Reps. Rahm Emanuel (D) of Illinois and Chris Van Hollen (D) of Maryland, he says.

"What does that tell you? Nobody is closer to the ground [than they are] in understanding what you want your candidates to run on." In the wake of congressional corruption scandals in the last Congress, Democrats knew they needed "a credible case that Congress has cleaned up its act or they couldn't ask voters to send them back," Ornstein adds.

In the run-up to this week's vote, public-interest groups who had rallied behind lobby and ethics reform fell out over whether the reform had gone far enough. A key sticking point is proposed language over how lawmakers will disclose member-sponsored projects, or earmarks.

The legislation requires that earmarks included in bills and conference reports, and their sponsors, be identified on the Internet at least 48 hours before the Senate votes. But the revised bill leaves it to the Senate majority leader or committee chairmen, rather than the Senate parliamentarian, to certify that all earmarks have been identified. The original Senate language allowed members to raise a point of order against individual earmarks on the floor of the Senate. Under the proposed new law, they could raise objections only if the required list were not provided.

"Americans are fed up with special interest earmarks that have been at the center of recent scandals," says Sen. Jim DeMint (R) of South Carolina, who blocked moves to a conference on lobby and ethics reform until he had assurances from Senate majority leader Harry Reid that strong earmark provisions would remain in the final bill. "It is ironic that Senator Reid has seen fit to rewrite a bill in secret that is supposed to provide transparency and sunlight. I'm especially disappointed in Speaker Pelosi, who started this debate with strong rhetoric for earmark disclosure. She completely yielded to Reid and pressure from lobbyists," he said in a statement.

Some public interest groups are backing Senator DeMint in what they see as a lively floor fight in the Senate, expected on Thursday. "The taxpayers' worst fears have been realized. Prototypical of Washington backroom deals, House and Senate Democrats have conjured up a deal that benefits only the powerful appropriators and the special interests that game the system at the expense of average Americans," said Tom Schatz, president of the Council of Citizens Against Government Waste.

But many other open-government groups praise the legislation for moving reform further than it has gone in any previous Congress.

"If you compare where we were in 2006, it's a giant step forward. It could have been two giant steps forward," says Bill Allison, senior fellow for the Sunlight Foundation, a public interest group that promotes transparency in government.

A key provision that was dropped in the final version of this bill would have made lists of congressional earmarks available on a searchable database. The new version makes that requirement only "if technically feasible."

"This is something Amazon.com does every day with its eyes closed," says Mr. Allison. "We're still going to be in a situation where public interest groups are going to have to get earmarks in a form that's usable. Congress should have done this itself and didn't."

Judge Shira Scheindlin said that granting class action status was the only way to stop the state-wide enforcement of an anti-begging law that was ruled unconstitutional in 1992, but since then has been used in over 10,000 arrests and prosecutions across the entire state.

"We're looking forward to putting an end to this practice," said Matthew Brinckerhoff, the beggars' lawyer.

The city lawyers had contended that the plaintiffs were unfit to represent such a large group in a class action suit, due to mental illness and drug addiction.

"The saga of Global Money Management demonstrates once again that fraudsters can steal money using e-mails, letters and stock solicitations rather than guns," Halpern said. "We must be vigilant for this type of fraud, which causes so much harm to so many."

Two other people indicted in the case – GMM fund co-manager Marvin Irwin Friedman and bookkeeper Alice Mae Swiderski – previously pleaded guilty and are awaiting sentencing.

In his plea agreement, Levy admitted diverting up to $7 million in GMM investor money to entities he controlled for his own personal use. He also filed false tax returns for the years 2001, 2002 and 2003 that resulted in a tax loss to the government of about $2.3 million, according to court documents.

Beginning in at least 1997, Levy and Friedman solicited investors through word of mouth, referrals from family members and, later, by soliciting institutional investors through referrals from investment banking firms, according to court documents.

Levy and Friedman touted the successful performance of the GMM hedge fund, claiming it was making substantial returns that averaged 25 percent annually. The partners also claimed not to charge any fees for managing the fund but instead to receive a share of profits generated by the GMM fund.

Prosecutors alleged the hedge fund was little more than a Ponzi scheme, in which the two men used new investor funds to pay off longer-term investors in an attempt to induce those individuals to invest more in the fund. The partners also diverted funds to pay their personal expenses and to benefit other corporate entities they controlled.

Global Money Management collapsed in March 2004, shortly after the Securities and Exchange Commission sued GMM, its general partner LF Global Investments and controlling director Friedman for securities fraud.

At the urging of the SEC, a judge froze the partnership's assets and turned GMM over to court-appointed receiver Charles La Bella. At the time, La Bella found less than $50,000 in assets in the partnership, which once purported to control $116 million on behalf of about 200 investors.

In earlier court documents, prosecutors said La Bella traced more than $18 million in investor funds to accounts controlled by Levy, including at least one account in Switzerland.

Halpern said the government now believes it has recovered any money that wasn't "dissipated" by partners Levy and Friedman.

Ronald Krajewski, acting assistant special agent in charge for the San Diego office of the Internal Revenue Service, said the agency, which investigated the case with the Department of Justice, will "aggressively pursue" individuals who take financial advantage of clients and evade their income taxes.

"Investment professionals who have betrayed their clients' trust and placed their own personal monetary gain ahead of their clients' financial well-being will be prosecuted," Krajewski said.

"Counsel for a detainee has a 'need to know' the classified information relating to his client's case," the appeals court ruled. "The government may withhold from counsel, but not from the court, certain highly sensitive information."

The appeals court decision is likely to be considered by the Supreme Court as it decides whether detainees should have greater access to U.S. civilian courts.

When detainees are brought before military CSRTs, they are not allowed to have lawyers with them and the Pentagon decides what evidence to put forward. Unlike in criminal trials, there is no obligation for the government to turn over evidence that the defendant might be innocent. If the military reviewers determine a prisoner is an enemy combatant, he can challenge that designation in the U.S. Circuit Court of Appeals for the District of Columbia.

During that appeal, government attorneys argued, federal judges have the authority only to review the evidence the Pentagon had chosen to put forward during the CSRT hearing.

Without all the information, the appeals court said, deciding whether the military reviewers acted appropriately would be like trying to figure out the value of a fraction without knowing both numbers.

"The court has resoundingly rejected the government's effort to control the record and to limit an investigation into the truth," said attorney Sabin Willett, who argued the case.

Washington, D.C., attorney David Remes said, however, that the court's decision "will turn out to be a prescription for endless litigation in these cases."

"The court said that its review goes beyond the information presented to the Combatant Status Review Tribunals, but the court never explains how it can determine what that information might be," said Remes, who represents 17 Guantanamo Bay detainees.

Remes also said that "it's clear from the decision that the review under the Detainee Treatment Act falls short of constitutionally required habeas corpus review." The Supreme Court will soon consider whether detainees have the right to challenge their detention in federal courts. That right was stripped away by the most recent terrorism law.

Remes said the ruling contains restrictions that "will seriously cripple the lawyer-client relationship." Under the decision, detainees and their lawyers must limit communications to events leading up to a detainee's capture and the conduct of CSRT proceedings relating to the detainee.

Jonathan Hafetz, an attorney involved in other detainee cases, said Friday's court ruling is only a minor improvement in a seriously flawed process.

"It's definitely better than what the government had proposed but it still doesn't provide for a meaningful process," Hafetz said.

The Justice Department argues that the detainees are being afforded more rights than required by law. The government argues that it cannot bring the detainee cases in civilian courts without jeopardizing national security.

Friday's unanimous decision was issued by Judges Douglas Ginsburg, Judith Rogers and Karen Lecraft Henderson. Rogers is a Clinton appointee. Ginsburg, the chief judge of the appeals court, is a Reagan appointee. Henderon was appointed by President Bush's father, George H.W. Bush.

The market was relatively small at the time the regulations were established in the 1930s.

But it has grown exponentially in recent years, with more than $2,400bn in municipal securities outstanding – more than the gross domestic product of China, according to the SEC.

Last year alone, more than $430bn in new municipal bonds were issued, about the size of the US defence budget.

Up to another third of the market is held indirectly through money market funds, mutual funds, and closed-end funds.

Yet the SEC's authority is limited to enforcing the anti-fraud provisions of US securities laws in the trading of munis.

Unlike in the corporate bond and other securities markets, the regulator's remit does not extend to assessing disclosures by muni bond issuers to ensure they are transparent.

Last year the city of San Diego was sanctioned by the SEC for having hidden billions of dollars in projected pension and healthcare liabilities to investors in its municipal bonds in the biggest case of such fraud since the late 1990s.

Saying there was an "urgent need" to improve the quality and the availability of disclosure documents, Mr Cox said: "One would think, given the size and importance of this market, and the prevalence of individual investors and older Americans in muni trading and investing, that investors in municipal bonds can rest assured that their interests are fully protected by the same high standards that operate everywhere else in the US capital markets. Not exactly. And not even close."

"The fact is, even large issuers of municipal securities generally don't have policies and procedures to ensure accurate disclosure," Mr Cox told a town hall meeting in Los Angeles.

He suggested that legislation establish a "limited regulatory regime" that would provide that the offering the offering documents and periodic reports provided to investors contain information similar to what they were accustomed to seeing for other securities they own.

It could also mandate that issuers of municipal bonds use US Gaap accounting standards, and give the SEC oversight of the Governmental Accounting Standards Board (GASB).

"A cornerstone of reform in this area would be to ensure that private companies who access the municipal market indirectly by using municipal issuers as conduits will meet the same requirements that municipal issuers themselves must meet," Mr Cox said.

The move is the latest example of attempts by US regulators to update rules governing securities issuance in place since the 1930s. Such rules are among a host of issues blamed for holding back the competitiveness of the US capital markets.

Vito Fossella, a republican congressman from New York, welcomed Mr Cox's initiatives, saying: "The quality and timely disclosure of the financials of muni issuers has been lacking. There needs to be greater transparency to protect investors, stop fraud and prevent a recurrence of the near defaults we've seen in recent years."

The appeals court concluded that U.S. District Judge Stanley R. Chesler erred in not allowing the plaintiffs to amend their complaint with additional materials. Chesler had ruled on the grounds that those materials were acquired as a result of a consensual discovery agreement.

The panel said the district judge needs to determine whether the additional materials would affect the lawsuit's merit.

Since it is a shareholder suit, the plaintiffs normally would have been required to first make a demand upon the company's board of directors. But the plaintiffs said such a demand would have been futile at the time they began the lawsuit.

"Of course, we express no opinion about whether the newly acquired facts that are included in the amended complaint will alter this analysis," the 3rd Circuit judges wrote. "The allegations must not simply demonstrate an aloof or negligent board, but nonfeasance that rose to the level of egregiousness or bad faith."

"We look forward to presenting our arguments anew to the district court under the guidance provided by the appellate court today," said Ted Mayer, an attorney for Merck. "Given that today's ruling did not challenge the reasoning of the lower court in previously dismissing the lawsuit, we believe that the outcome should be the same."

A message left with an attorney for the plaintiffs was not immediately returned.