MSRB Receives SEC Approval on Municipal Bond Disclosure Proposals

Date: June 2, 2010

Contact: Jennifer Galloway, Chief Communications Officer
             (703) 797-6670


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) has received approval from the Securities and Exchange Commission (SEC) on proposals for additional disclosure related to municipal bonds. Within 12 months, underwriters of municipal securities will be required to provide – and municipal securities issuers will be able to provide voluntarily – information to assist investors and other market participants in assessing the availability of ongoing disclosures made by issuers through the MSRB’s Electronic Municipal Market Access (EMMA) website.  Also within 12 months, issuers will be permitted to disseminate pre-sale disclosures through the EMMA website, which provides free, centralized public access to all new issue disclosure documents for the municipal securities market. 

“We are pleased that the SEC continues to value the importance of disclosure in the municipal bond market,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “Our goal is to facilitate the flow of information from issuers to investors and the general public in a manner that respects the unique role of state and local governments.  The changes approved by the SEC enhance the required disclosures from issuers and ensures even more disclosures about material events for investors.”                           

The SEC’s approval was in conjunction with its adoption of amendments to SEC Rule 15c2-12 on municipal securities disclosure. Underwriters will be required to provide information alerting investors about whether, when and from whom they can expect to have access to continuing disclosures about new municipal bonds through the EMMA website.  Specifically underwriters will need to post on EMMA information about whether the new issue is subject to the continuing disclosure requirements of SEC Rule 15c2-12, along with the identity of the entities that will submit continuing disclosure information and the date by which annual financial information is expected to be submitted each year to the EMMA website. This will allow investors to better assess their expectations about ongoing disclosures when making investment decisions.

The SEC also approved the MSRB’s proposals to permit an issuer, on a voluntary basis, to submit preliminary official statements and related pre-sale documents, such as notices of sale, for posting on the EMMA website. Although the MSRB is prohibited by federal statute from mandating disclosures prior to the sale of a new issue, the voluntary program for pre-sale submission of these documents will be a tool for issuers to provide investors and the marketplace with access to key information needed to make informed investment decisions. 

The MSRB last week amended its initial proposal so that issuers’ voluntary undertakings to provide annual financial information within 120 days of fiscal year end must be included in the contractual agreements entered into under the SEC’s Rule 15c2-12 as a condition to having such undertaking highlighted on EMMA. Issuers’ efforts to disclose, on a voluntary basis on EMMA, that they have prepared audited financial statements according to generally accepted accounting principles (GAAP) as established by either the Governmental Accounting Standards Board (GASB) or Financial Accounting Standards Board (FASB) also must be included in contractual agreements as a condition to having such undertaking highlighted on EMMA.

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.