Securities Law Prof Blog

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

Thursday, July 26, 2007

Cox Releases White Paper on Municipal Securities Markets

Following up on his July 18 speech on "Integrity in the Municipal Market," Chair Cox delivered to Congress a SEC staff White Paper that calls for improvements in accounting and disclosure in the municipal securities market.  While the paper does not call for the full-scale regulatory system, including SEC review, applicable to non-municipal securities, it proposes a number of reforms designed expressly for the needs of the municipal market, including:

Requiring that offering documents and periodic reports provided to investors contain information similar to what is required for all other securities offerings;
Making information on municipal securities available on a more timely basis, for example, by tapping the power of the Internet to provide an easily accessible, free source for the display of that information, similar to the SEC's interactive data systems for corporations and mutual funds;
Mandating municipal issuer use of generally accepted governmental accounting standards;
Providing for an independent funding mechanism and SEC oversight of the independent accounting standards board in this area, the Government Accounting Standards Board, just as the Sarbanes-Oxley Act provided for the Financial Accounting Standards Board;
Ensuring that private companies who access the municipal market indirectly by using municipal issuers as conduits meet the same requirements that corporate issuers must meet;
Requiring large, complex, and frequent issuers of municipal securities to have policies and procedures for disclosure; and
Clarifying the legal responsibilities of issuer officials, underwriters, bond counsels and other participants.

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