MSRB Responds to SEC Request on Issuers' Disclosure of Annual Financial Information

Date: May 21, 2010

Contact:             Jennifer A. Galloway, Chief Communications Officer
                         (703) 797-6600


Alexandria, VA – At the request of the Securities and Exchange Commission, the Municipal Securities Rulemaking Board (MSRB) announced today it has amended its proposal on the timing of financial disclosures made by municipal securities issuers on the MSRB’s Electronic Municipal Market Access (EMMA) website. The MSRB previously filed with the SEC a proposal to allow an issuer to voluntarily elect to have the EMMA website highlight the issuer’s undertaking to provide annual financial disclosures to EMMA within 120 days after the end of the issuer’s fiscal year, as well as its undertaking to prepare audited financial statements according to certain industry accounting standards. These voluntary undertakings were designed to encourage more rapid dissemination and more standardized preparation of key financial information about municipal securities for use by investors.

The MSRB has amended its 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.

In making the changes, the MSRB acknowledges the SEC’s desire to improve the flow of key disclosure information from municipal securities issuers to investors and supports additional industry-wide efforts to achieve this goal. “Better and more timely disclosures by issuers are beneficial for municipal securities investors,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “The MSRB continues to work with issuer groups and other market participants to establish consensus on additional voluntary initiatives for making interim and other financial and operating information available to the marketplace on a timely basis.”

The SEC is expected to act on the MSRB’s full proposal the week of May 24, 2010 in conjunction with final action on certain pending amendments to SEC Rule 15c2-12. In addition to the voluntary undertakings, the MSRB’s full proposal includes provisions to permit issuers, on a voluntary basis, to submit preliminary official statements and related pre-sale documents on EMMA and post a hyperlink to their investor relations web page.  The proposal retains a transitional provision, available through the end of 2013, to allow issuers to make the voluntary undertaking on the timing of annual financial disclosures based on a 150-day period. Under a companion filing by the MSRB with the SEC, the proposal also would require underwriters of new municipal securities to provide information to EMMA designed to inform investors about whether the issuer has committed to providing ongoing disclosure, the identity o other obligated persons who may be expected to provide such ongoing disclosure and the expected timing for access through EMMA to annual financial information.

If approved by the SEC, the changes to EMMA regarding the additional voluntary disclosures and requirements for underwriters would become effective within 12 months of SEC approval.

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.