US Securities and Exchange Commission Proposes Rule Amendments to Improve Municipal Securities Disclosures

The SEC proposed rule amendments to improve investor protection and enhance transparency in the municipal securities market. These proposed amendments are intended to provide timely access to information regarding certain financial obligations incurred by issuers and obligated persons that could impact such entities’ liquidity and overall creditworthiness.

Rule 15c2-12 under the Securities Exchange Act of 1934 requires brokers, dealers and municipal securities dealers that are acting as underwriters in primary offerings of municipal securities subject to the Rule, to reasonably determine, among other things, that the issuer or obligated person has agreed to provide to the Municipal Securities Rulemaking Board (MSRB) timely notice of certain events.  The amendments proposed by the SEC would add two new event notices:

(i) incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material; and

(ii) default, event of acceleration, termination event, modification of terms or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties.

The public comment period will remain open for 60 days following publication of the release in the Federal Register.

View the proposed rule amendments.