MSRB NOTICE 2011-08 (FEBRUARY 7, 2011)

REMINDER OF FEBRUARY 14, 2011 EFFECTIVE DATE FOR AMENDMENTS TO RULE G-32 RELATED TO SUBMISSION OF INFORMATION ABOUT CONTINUING DISCLOSURE UNDERTAKINGS UNDER EXCHANGE ACT RULE 15C2-12

The Municipal Securities Rulemaking Board (MSRB) reminds brokers, dealers and municipal securities dealers (“dealers”) acting as underwriters, placement agents or remarketing agents for primary offerings of municipal securities (“underwriters”) of upcoming changes to MSRB Rule G-32, on Disclosures In Connection With Primary Offerings.  As previously announced,[1] on February 14, 2011 changes to Rule G-32 become effective that will require underwriters to provide to the MSRB’s Electronic Municipal Market Access system (“EMMA”) certain information about continuing disclosure undertakings (the “Underwriter Amendment”).[2] This information includes: (i) an indication about whether the issuer or other obligated person has undertaken to provide continuing disclosures; (ii) the identity of any obligated persons other than the issuer; and (iii) the timing by which issuers or obligated persons have agreed to provide annual financial and operating data.  Disclosures submitted under the Underwriter Amendment will be made available on the EMMA web portal at http://emma.msrb.org and through the EMMA primary market disclosure subscription service. 

An updated version of the Primary Market Submission Manual has been posted to the MSRB web site reflecting the changes to Rule G-32.[3]  Underwriters may wish to attend one of the remaining webinars for training on compliance with the upcoming changes.[4]

DESCRIPTION OF THE UNDERWRITER AMENDMENT

Since June 1, 2009, underwriters have been required to submit official statements and certain other primary market documents to EMMA under Rule G-32 together with related indexing information of Form G-32.  These submissions are made available to the public on the EMMA web portal and through the EMMA primary market disclosure subscription service.

The Underwriter Amendment amends Rule G-32 and Form G-32 to require underwriters of primary offerings of municipal securities to submit to the MSRB’s EMMA system, as part of their primary offering submission obligation under Rule G-32(b), certain key items of information relating to continuing disclosure undertakings made by issuers and other obligated persons in connection with such primary offerings.  These items of information will be made available to the public through the EMMA web portal and are intended to inform investors in advance whether continuing disclosures would be made available with respect to a particular municipal security, from and about whom such continuing disclosures are expected to be made, and the timing by which such disclosures should be made available.

The items of information regarding continuing disclosure undertakings to be provided by underwriters through Form G-32 include:

  • whether the issuer or other obligated persons have agreed to undertake to provide continuing disclosure information as contemplated by Exchange Act Rule 15c2-12;
  • the name of any obligated person, other than the issuer of the municipal securities, that has or will undertake, or is otherwise expected to provide, continuing disclosure as identified in the continuing disclosure undertaking; and
  • the timing set forth in the continuing disclosure undertaking, pursuant to Rule 15c2-12(b)(5)(ii)(C) or otherwise, for the submission of annual financial information each year by the issuer and/or any obligated persons to the EMMA system, either as a specific date or as the number of days or months after a specified end date of the issuer’s or obligated person’s fiscal year.

The name or names of obligated persons to be provided would be of the entity acting as an obligated person identified in the continuing disclosure undertaking, not an individual at such entity, unless the obligated person is in fact an individual.  The timing for submission of annual financial information can be provided either as a specific date each year (i.e., month and day, such as June 30) or the number of days or months after the end of the fiscal year (i.e., 120 days after the end of the fiscal year).  The underwriter can use the day/month count alternative only if the underwriter also submits the day on which the issuer’s or obligated person’s fiscal year ends (i.e., month and day, such as June 30).  If annual financial information is expected to be submitted by more than one entity and such information is expected to be submitted by different deadlines, each such deadline will be required to be provided matched to the appropriate issuer and/or obligated person.

The underwriter will be required to provide information regarding whether the issuer or other obligated persons have agreed to undertake to provide continuing disclosure information as contemplated by Rule 15c2-12 by no later than the date of first execution of transactions in municipal securities sold in the primary offering, as defined in Rule G-32.  The remaining items of information will be required to be provided by the closing date of the primary offering.  Until closing, the underwriter will be required to update promptly any information it has previously provided on Form G-32 which may have changed or to correct promptly any inaccuracies in such information, and will be responsible for ensuring that such information provided by it is accurate as of the closing date.  So long as the underwriter has provided such information accurately as of the closing date, it will not be obligated to update the information provided if there are any subsequent changes to such information, such as additions, deletions or modifications to the identities of obligated persons or changes in the timing for providing annual financial information.  Issuers and obligated persons will be able to make changes to such information through their submission accounts established in connection with EMMA’s continuing disclosure service.

Information regarding whether an offering is subject to a continuing disclosure undertaking, the names of obligated persons and the deadlines for providing annual financial information will be displayed on the EMMA web portal and also will be included in the EMMA primary market disclosure subscription service.  These items are intended to provide investors and others with information on the expected availability of disclosures following the initial issuance of the securities.  In particular, users of the EMMA web portal will be able to determine which obligated persons are expected to submit annual financial information, audited financial statements and material event notices on an on-going basis, as well as the date each year by which they should expect to have access to the annual financial information.

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Questions on this notice may be directed to Justin R. Pica, Director, Uniform Practice Policy, at (703) 797-6716. Questions about making primary market submissions should be directed to the Market Information Help Desk at (703) 797-6668.

February 7, 2011

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TEXT OF AMENDMENTS TO RULE G-32[5]

Rule G-32.  Disclosures In Connection With Primary Offerings

(a) No change.

(b) Underwriter Submissions to EMMA.

(i)-(v) No change.

(vi) Procedures for Submitting Documents and Form G-32 Information.

(A)-(B) No change.

(C) The underwriter in any primary offering of municipal securities for which a document or information is required to be submitted to EMMA under this section (b) shall submit such information in a timely and accurate manner as follows:

(1) Form G-32 information submissions pursuant to paragraph (b)(i)(A) hereof with respect to a primary offering shall be:

(a) initiated on or prior to the date of first execution with the submission of CUSIP numbers (except if such CUSIP numbers are not required under Rule G-34 and have not been assigned), initial offering prices or yields (including prices or yields for maturities designated as not reoffered), if applicable, and the expected closing date, and whether the issuer or other obligated persons have agreed to undertake to provide continuing disclosure information as contemplated by Securities Exchange Act Rule 15c2-12, together with such other items of information as set forth in Form G-32 and the EMMA Dataport Manual; and

(b) No change.

Specific items of information required by Form G-32 shall be submitted at such times and in such manners as set forth in the EMMA Dataport Manual.

(2)-(4) No change.

(D) No change.

(c) No change.

(d) Definitions. For purposes of this rule, the following terms have the following meanings:

(i)-(xii) No change.

(xiii) The term “obligated person” shall mean an obligated person defined in Securities Exchange Act Rule 15c2-12(f)(10).

(e) No change.

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TEXT OF AMENDMENTS TO FORM G-32

I-VIII. No change.

IX. Continuing Disclosure Information

A. Continuing disclosure undertaking indicator

B. Obligated persons, if any, identified in continuing disclosure undertaking, other than issuer (for issue subject to SEC Rule 15c2-12)

C. Date annual financial information expected to be submitted (for issue subject to SEC Rule 15c2-12) (not required if items IX.D and IX.E are both provided)

D. Issuer/obligated person fiscal year end date (for issue subject to SEC Rule 15c2-12) (required if item IX.C does not provide)

E. Number of days/months after fiscal year end by which annual financial information expected to be submitted (for issue subject to SEC Rule 15c2-12) (required if item IX.C does not provide)


[2] The Underwriter Amendment will apply to underwriters initiating primary market submissions on or after February 14, 2011.*

[3] An updated version of the Primary Market Submission Specifications detailing technical specifications for computer-to-computer submissions of primary market information was posted to the MSRB web site in November 2010.

[5] Underlining indicates additions and strikethroughs indicate deletions.

* This notice was revised to correct the date in footnote 2.