Understanding Primary Offering Disclosure Responsibilities: Due Diligence

Read the learning objectives and topics covered in this MuniEdPro® course. Log into MuniEdPro®.

Target Audiences

  • Broker-dealers
  • Municipal advisors
  • Municipal securities issuers

Learning Objectives

At the end of this course learners will be able to:

  • Understand disclosure requirements mandated by federal municipal securities law;
  • Distinguish between the official statement disclosure obligations of underwriters and those of issuers; and
  • Practice making disclosure decisions in a fictional case study

Course Outline

1. Investigations
a. Risk Identification
i. Due diligence
1. Project description
2. Official statement
ii. Terms of municipal securities
1. Negotiated sales
2. Competitive bids
3. True interest cost
iii. Minimum denominations
1. Bond counsel
2. Disclosure counsel
iv. Risk factors
1. Disclosing risks
b. Issuer’s Ability to Pay
i. Security and sources of payment
1. General obligation bonds
2. Revenue bonds
ii. Identifying outstanding debt
c. Litigation
i. Federal tax matters
ii. Materiality
iii. Bond opinions
d. Continuing Disclosure Compliance
i. Published ratings
ii. Consequences of default
iii. Legal documents
iv. Continuing disclosure agreement
e. Appendices
i. Interest rates
ii. Terms of underwriting
iii. Appendices
1. Gathering the appendices
2. Revenue bonds and feasibility reports
3. Checking audits

2. Document Finalization
a. Speaking to the Market
i. Preliminary Official Statements
b. Finalizing the Official Statement
i. EMMA®
c. Amending the Official Statement
i. Stickering the Official Statement

3. Assessment