Securities and Exchange Commission Announces Self-Reporting Initiative for Issuers and Underwriters Securities and Exchange Commission Announces Self-Reporting Initiative for Issuers and Underwriters

Securities and Exchange Commission Announces Self-Reporting Initiative for Issuers and Underwriters of Municipal Securities

The SEC Enforcement Division recently announced the “Municipalities Continuing Disclosure Cooperation Initiative” (the MCDC Initiative).  The main purpose of the MCDC Initiative is to encourage issuers (or “obligors” on conduit bonds) and/or underwriters of municipal securities to self-report certain materially inaccurate statements in bond offering documents.  Specifically, the MCDC Initiative focuses on incorrect statements regarding prior compliance with continuing disclosure obligations, as detailed in SEC Rule 15c2-12.

In 2013, the SEC demonstrated an increased punitive focus on compliance failures with respect to annual reporting requirements by issuers and underwriters of municipal securities, specifically with respect to faulty official statement disclosures regarding prior continuing disclosure compliance.

The MCDC Initiative offers issuers, obligors and underwriters who “self-report” these violations more favorable settlement terms, including the potential for no payment of any civil penalty by the issuer and reduced monetary penalties to underwriters.

Issuers, obligors or underwriters of municipal bonds should review past compliance with continuing disclosure obligations.  If problems are discovered, consult your financial advisor or counsel about appropriate corrective steps.  This will help avoid problems with your next bond issues.  The MCDC Initiative should be considered if prior official statements have misstated your compliance history.

View the SEC’s full description of the MCDC Initiative here.   

For more information, contact Philip Whistler, Jeff Lewis, Matthew Fornshell, Lu Carole West, Albert Lin, Ross Fulton, Erik Long, Kip Wahlers, or any member of Ice Miller’s Government Enforcement or Municipal Finance Groups.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
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