Monday, March 19, 2012
The SEC issued a Risk Alert on compliance measures to help broker-dealers fulfill their due-diligence duties when underwriting offerings of municipal securities and issued an Investor Bulletin to help educate investors about municipal bonds.
The alert issued by the SEC’s Office of Compliance Inspections and Examinations (OCIE) notes that in recent years there has been significant attention focused on the financial condition of some state and local governments and cites concerns about the extent of written documentation by broker-dealers of due diligence efforts and supervision of municipal securities offerings.
The alert includes examples of practices used by broker-dealers that may help to demonstrate due diligence and supervisory reviews. The Investor Bulletin issued by the SEC’s Office of Investor Education and Advocacy (OIEA) describes the attributes of municipal bonds, including investment risks, and provides information on where investors may obtain additional data on particular bonds.