The SEC and You: Ensuring Our Mutual Disclosure Objectives Are Met.

• Author: Brock, Emily Swenson
• Position: Federal Focus

Comparing governments to private-sector entities with respect to timely financial reporting is comparing apples to oranges. Governments are service driven, while private-sector entities are profit driven.

GFOA has a long history of encouraging transparency in the municipal marketplace. Through our best practices, GFOA consistently urges our members to fully disclose material events to investors in a timely manner. (1) Accordingly, GFOA supports efforts to ensure that material information related to municipal securities credits is available to investors. The Federal Liaison's work in Washington, D.C. includes regular discussion with the Securities and Exchange Commission (SEC) to describe the existing efforts of municipal bond issuers that embody our mutual commitment to meaningful, timely disclosure to our investors.

RULE 15C2-12

SEC Rule 15c2-12 is a key rule that governs the continuing disclosure agreement between the issuer and the broker dealer of the municipal bond. February 28, 2019, marked the implementation date of two new amendments to SEC Rule 15c2-12. (2) The amendments are an effort to provide additional financial information to investors when an issuer may have material financial obligations that could impact bond holders. In continuing disclosure agreements entered into on or after the effective date, governments now have to state that they will disclose to the market any new and material financial obligations, and notify the market when an outstanding or new financial obligation reflects material financial difficulties.

Together with their bond and/or disclosure counsel, issuers across the country are working to determine how the new disclosure requirements relate to their specific debt programs, future bond issuance, and other financial transactions. In member alerts issued before and after implementation, the GFOA Committee on Governmental Debt Management has consistently urged issuers to review their debt management and disclosure policies, and consider adding new provisions to address the amendments.

At roughly the same time as the new disclosure amendments were implemented, the SEC Office of Municipal Securities hosted its first Municipal Securities Conference in Washington, D.C. In his opening comments, SEC Chairman Jay Clayton raised a point about the municipal securities market, which he is concerned about. Clayton said there is an "aspect of the municipal securities market that I believe can and should be improved...