IX. Federal Securities Laws

• Library: Municipal Law Deskbook (ABA) (2015 Ed.)

IX. FEDERAL SECURITIES LAWS

Lawyers make careers of specializing in the application of federal securities laws to municipal bonds. This section gives a highly simplified overview. Practitioners desiring more detail may wish to read Disclosure Roles of Counsel in State and Local Government Securities Offerings (3d ed. 2009), published by the ABA Section of State and Local Government Law.

The Securities Act of 1933 (the Securities Act) makes it unlawful to sell securities unless they are registered with the SEC, are exempted from registration, or the sale has a transactional exemption. Local government bonds are "securities" as defined in Section (2)(a) of the Securities Act.

However, local government bonds are exempted from registration under the Securities Act by Section 3(a)(2) of that Act, although some local government bond structures may include separate securities that are not local government bonds and are subject to registration. Securities that are exempted from registration by Section 3(a)(2) are exempted from the liability provisions of Sections 11 and 12 of the Securities Act but are subject to the general antifraud provisions of Section 17 of the Securities Act. Section 17 of the Securities Act makes it unlawful for any person to obtain money in interstate commerce by means of an untrue statement in the offer or sale of securities, or for any omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading. Most U.S. circuit courts have...