July 10, 2014
Re: SEC Disclosure Rules Self-Reporting Deadline Approaching
Please share and discuss this matter with your finance professionals, municipal attorney and bond counsel and advisors. This is a serious matter that is having a significant impact on the bidding for bonds and notes by all local governments.
The Municipalities Continuing Disclosure Cooperation Initiative (the “MCDC Initiative”), which was announced by the Securities and Exchange Commission (SEC) on March 10, 2014, is intended to address possible past violations of the federal securities laws by municipal issuers and underwriters of municipal securities, in connection with certain representations about continuing disclosures in bond offering documents. Specifically, the MCDC Initiative aims to correct past failures to accurately post on the Electronic Municipal Market Access system (EMMA) all the information required under Municipal Securities Rulemaking Board (MSRB) rules.
The EMMA system serves as the official source for municipal securities disclosures and related market data. EMMA provides free on-line access to disclosure documents, refinancing agreements, interest rates and auction results and statistics on daily activity.
To accomplish this goal, under the MCDC Initiative, the Division of Enforcement (the “Division”) of the SEC will recommend favorable settlement terms to issuers and obligated persons involved in the offer or sale of municipal securities (collectively, “issuers”) as well as underwriters of such offerings if they self-report to the Division “possible violations involving materially inaccurate statements relating to prior compliance with the continuing disclosure obligations specified in Rule 15c2-12 under the Securities Exchange Act of 1934.”
The deadline for self-reporting expires after September 9, 2014, as will the opportunity for favorable settlements.
We understand that this matter could be the topic of a future Local Finance Notice, to be issued by the Division of Local Government Services (DLGS) in the Department of Community Affairs (DCA). In the meantime, as mentioned above, please share this letter and discuss this matter with your finance professionals, municipal attorney and bond counsel and advisors.
We thank League Associate Counsel Edward J. McManimon, Esq., for his advice and expertise on this matter. We will keep you posted on further developments.
Very truly yours,
William G. Dressel, Jr.