Securities Law Prof Blog

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

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Thursday, July 16, 2009

SEC Proposes to Improve Disclosure about Municipal Securities

The SEC voted unanimously on July 15 to propose rule amendments to improve the quality and timeliness of municipal securities disclosure.  The proposed amendments to SEC Rule 15c2-12 would help investors make more knowledgeable investment decisions, effectively manage and monitor their investments, and avoid fraud. The proposed amendments also would assist broker-dealers in carrying out their responsibilities under the securities laws.

Because municipal securities are exempt from the disclosure requirements of the federal securities laws, the SEC adopted Rule 15c2-12 in 1989, which was designed to foster greater transparency in the municipal securities market.   Rule 15c2-12 prohibits brokers, dealers, and municipal securities dealers from purchasing or selling municipal securities unless they reasonably believe that the state or local government issuing the securities has agreed to disclose such things as annual financial statements and notices of certain events, such as payment defaults, rating changes and prepayments.

Public comments on today‚Äôs proposed rule amendments must be received by the Commission within 45 days after their publication in the Federal Register.  The full text of the proposed rule amendments will be posted to the SEC Web site as soon as possible.

http://lawprofessors.typepad.com/securities/2009/07/sec-proposes-to-improve-disclosure-about-municipal-securities.html

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