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July 24, 2014

Re: Division Issues Local Finance Notice on Secondary Bond Market Continuing Disclosure Commitments

Dear Mayor:

The Division of Local Government Services has issued Local Finance 2014-9, bringing attention to and guidance on the Securities Exchange Commission’s (SEC) Secondary Bond Market Continuing Disclosure Commitments.   We strongly suggest that you review this Local Finance Notice with your Chief Financial Officer and Bond professionals.

As a condition of providing access to capital in the form of debt, the financial community, at the time of buying debt and while debt remains outstanding, expects to be kept abreast of key financial information that could impact the value of securities in the secondary market.  Under federal law, local governments have an obligation to issue certain information at the time of issuing new debt, and they are frequently contractually obligated to continue providing certain information while their debt remains outstanding.      

Earlier this year, the SEC adopted a program to encouraged local government issuers to self-identify past noncompliance and improves timely continuing disclosure in the future.  Their program, known as the “Municipalities Continuing Disclosure Cooperation Initiative” essentially establishes lesser enforcement actions provided local government issuers (and others) self-identify past noncompliance and agree to a plan designed to prevent future noncompliance. (See our July 10 letter at You can read more about this program by visiting:  The Division is strongly recommending that local government officials proactively take steps to self-identify their own levels of compliance with Continuing Disclosure Agreements if they have outstanding debt and consult their public finance officials during this process to, among other things, determine if it is advisable to participate in the SEC’s program.    

In the Local Finance Notice, the Division notes that noncompliance could make it difficult in accessing credit markets.  Consequences for noncompliance could also include, among other things: (1) enforcement actions being brought by the SEC that will result in more severe settlements otherwise available pursuant to “the SEC’s “Municipalities Continuing Disclosure Cooperation Initiative”; (2) denial or deferral of applications made to the Local Finance Board or Director of the Division for various approvals; (3) actions against State licensures in the event of fraudulent attestations of compliance; and/or (4) decreased scores on future “Best Practices Questionnaires” (which will contain questions as to past compliance) that could trigger a withholding of a portion of State Aid.  

 The Division will also be drafting a Local Finance Notice or take other appropriate action to require: (1) Chief Financial Officer’s to attest as part of budget submissions to the Division that appropriate steps are being taken to ensure compliance with continuing disclosure requirements; and (2) auditors to treat non-compliance with continuing disclosure requirements as an instance of non-compliance with prevailing laws, statutes, regulations, contracts and agreements that is required to be reported under Government Auditing Standards. 

The Division is encouraging you to read the Local Finance Notice in its entirety and consult your public finance professionals so you understand your continuing disclosure obligations and what must be done to achieve compliance. 

If you have any questions or need additional information please contact Lori Buckelew, Senior Legislative Analyst, at 609-695-3481 x112 or

Very truly yours,

William G. Dressel, Jr.
Executive Director



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