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SEC Proposes Rules to Improve Municipal Securities Disclosures

At Wednesday's open meeting, the SEC approved rule proposals intended to improve the timeliness and quality of municipal securities disclosures. Though the Commission does not have statutory authority over municipal securities, the rule proposals seek to provide enhanced information to municipal securities investors by further regulating those who underwrite or sell such municipal securities. According to the SEC's press release, the new rules would achieve this by:

  • Expanding the scope of rule 15c2-12 prohibiting 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.
  • Improving the disclosures related to tax risk.
  • Strengthening and expanding the disclosures about important events that may affect the value of the security.
  • Establishing a specific deadline by which these enumerated important events must be disclosed.
  • Providing additional guidance to brokers, dealers, and municipal securities dealers about their responsibilities with regard to municipal securities disclosures.

The proposing release will be published in upcoming weeks.

The full text of the Commission's press release and fact sheet is available at: http://www.sec.gov/news/press/2010/2010-85.htm