MSRB Seeks Input on Electronic Dissemination of 529 College Savings Plan Disclosures

Date: March 1, 2012

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


Alexandria, VA – The Municipal Securities Rulemaking Board announced today it is seeking comment on the effectiveness of internet disclosures to investors in 529 college savings plans and the concept of implementing an electronic delivery system of basic plan disclosure documents. 529 plans are established by states for families to invest money to pay for qualified higher education expenses of their beneficiaries.

“We are interested in understanding how investors in 529 plans learn about their key features and whether electronic dissemination of basic disclosure documents would improve investor knowledge and access to important information,” said MSRB Executive Director Lynnette Kelly.

The MSRB’s concept proposal—which precedes the development of rulemaking—would permit dealers selling 529 plan interests to notify their customers of how to access free centralized disclosure documents on EMMA, rather than send paper copies to the customer by the settlement of the transaction. Currently, brokers, dealers, and municipal securities dealers serving as primary distributors for 529 plans must ensure the timely posting of the basic 529 plan disclosure documents to  MSRB’s Electronic Municipal Market Access (EMMA®) free public website.These disclosure documents provide information to investors on the terms and conditions of investing in a particular 529 plan and generally explain how to set up and contribute to an account, investment options, portfolio strategies and risks, fees and costs, and tax and financial aid considerations, among other information.

The MSRB successfully implemented an electronic primary market dissemination system for municipal bonds in 2009. Dealers selling municipal securities can provide customers with notice of how to obtain official statements from EMMA, together with notice that a hard copy of the official statement would be provided upon request. Today’s proposal seeks to determine whether the investment experience and sophistication of 529 plan customers, and the features of 529 plans, justify the continuation of a physical-delivery system for disclosure documents.

The MSRB also is engaged in a broader evaluation of the merits of a centralized system for collection and dissemination of market information for 529 plans that would include total plan assets, quarterly contributions and withdrawals, and other important information.

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.