Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, July 19, 2007

Chair Cox on Integrity in the Municipal Market

Integrity in the Municipal Market, by Chairman Christopher Cox, U.S. Securities and Exchange Commission, Los Angeles, California, July 18, 2007:

In this speech, Chair Cox points to the size of the municipal bond market today; nearly $2.5 trillion of municipal securities are outstanding.  In addition, 36% of all municipal securities are owned directly by households.  He goes on to say:

One would think, given the size and importance of this market, and the prevalence of individual investors and older Americans in municipal trading and investing, that investors in municipal bonds can rest assured that their interests are fully protected by the same high standards that operate everywhere else in the U.S. capital markets. Not exactly. And not even close

Our recent SEC enforcement actions in the municipal area, together with the expert observations of Commission staff, indicate an urgent need to improve the quality and the availability of disclosure documents and financial information for municipal securities. We need to take immediate steps to improve governmental accounting, and to insure that issuers make financial information available more quickly. And we need to increase the understanding and involvement of issuer officials in the disclosure process, so that process becomes subject to appropriate disclosure controls and procedures.

Chair Cox goes on to suggest a number of legislative solutions to provide better investor protection.

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