Securities Law Prof Blog

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

Wednesday, March 12, 2008

SEC Trading & Markets Director Testifies on Municipal Bond Turmoil

Erik R. Sirri, Director, Division of Trading and Markets, U.S. Securities and Exchange Commission, testified on Municipal Bond Turmoil: Impact on Cities, Towns and States, before the Committee on Financial Services, U.S. House of Representatives, on March 12, 2008.  He describes the current difficulties in the municipal bond market and states:

Due to the severity and immediacy of the auction-rate market decline and implications for investors, Commission staff is developing appropriate guidance to facilitate orderly markets and continue to protect investors. The guidance would be designed to clarify that, with appropriate disclosures, and compliance with certain other conditions, municipal issuers can provide liquidity to investors that want to sell their auction-rate securities without triggering market manipulation concerns. This may also have the secondary effect of easing the substantial financial burden on municipal issuers and conduit borrowers from unusually high interest rates. It also should facilitate an orderly exit from this market by municipal issuers and conduit borrowers who seek to do so.

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