Frequently Asked Questions
Comprehensive Guidance on Municipal Securities Disclosure
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What are the requirements of U.S. Securities & Exchange Commission Rule 15c2-12 (“the Rule”)?
The Rule requires non-exempt municipal debt issuers to file certain financial information, including audited financials, as well as prompt notice of specified events, on MSRB’s EMMA system located at www.emma.msrb.org.
What are continuing disclosure agreements (CDAs)?
Under Rule 15c2-12, issuers of municipal securities, such as school districts and local governments, must enter into an agreement to provide certain annual financial information and notices of specified events (event notices) that could affect the value of the securities. These agreements are known as Continuing Disclosure Agreements or CDAs.
What types of securities are covered under Rule 15c2-12?
Rule 15c2-12 applies to municipal securities offerings subject to SEC registration, such as bonds, notes, and other debt instruments issued by school districts, cities, counties, and special taxing districts.
Where are these disclosures filed?
Disclosures are filed with the Municipal Securities Rulemaking Board (MSRB) through its Electronic Municipal Market Access (EMMA) system. EMMA is accessible to the public, which ensures that investors and interested parties can view the disclosures.
How can issuers ensure compliance with their ongoing disclosure obligations?
Issuers can establish internal procedures to monitor compliance, work with legal and financial advisors familiar with municipal securities regulations, and regularly review and update their disclosure policies and practices.
What entities are subject to Rule 15c2-12?
Rule 15c2-12 applies to municipal securities issuers, which include not only states and local governments but also their agencies, authorities, and instrumentalities, such as school districts, cities, counties, and special taxing districts.
Has Rule 15c2-12 changed recently?
It’s important for issuers and other market participants to stay informed about updates to SEC rules. The most recent amendments to Rule 15c2-12 were in 2019, which expanded the list of significant events that need to be reported. However, always check the latest information from the SEC or consult legal experts for the most current data.
What are the significant events that must be reported?
Rule 15c2-12 outlines specific events that, if they occur, must be reported in a timely manner. These include:
- Principal and interest payment delinquencies
- Non-payment related defaults, if material
- Unscheduled draws on debt service reserves reflecting financial difficulties
- Unscheduled draws on credit enhancements reflecting financial difficulties
- Substitution of credit or liquidity providers, or their failure to perform
- Adverse tax opinion or event affecting the tax-exempt status of the security
- Modifications to rights of security holders
- Bond calls and tender offers
- Defeasances
- Release, substitution, or sale of property securing repayment of the securities
- Rating changes
- Bankruptcy, insolvency or receivership
- Merger, acquisition or sale of all issuer assets
- Appointment of successor trustee
- Financial obligation incurrence or agreement
- Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
- In addition, failure to provide an event disclosure as specified in the Continuing Disclosure Agreement requires that a Failure to File Notice be posted on EMMA acknowledging the absence of the filing.
What information must be disclosed annually?
Issuers are required to submit annual financial information and operating data relevant to the assessment of the financial health and operating status of the issuer. Typically, this includes audited financial statements and specific financial and operating data that reflect the issuer’s current financial status and economic outlook.
What are the consequences of non-compliance?
Non-compliance with the continuing disclosure requirements can lead to enforcement actions by the SEC, potential fines, and a negative impact on the marketability of the issuer’s bonds. Poor disclosure practices can also lead to higher borrowing costs in the future.
What are the advantages of retaining the services of a third-party dissemination agent?
Retaining a third-party dissemination agent offers several advantages for issuers of municipal securities including:
- Expertise & Experience
- Efficiency
- Accuracy & Timeliness of Filings
- Risk Management by maintaining access to the municipal bond market
- Enhanced Transparency
- Extension of staff through ongoing support
What Our Clients Say
"Accu-Disclose has been an invaluable partner to the City of Rio Rancho for its continuing disclosure needs for seven years. Loretta and Andres are very easy to work with, highly professional, and ensure that the City's disclosure requirements are met timely and accurately, not to mention completely painlessly, for the City. With Accu-Disclose on my team, I feel completely confident that the City is compliant with its continuing disclosure obligations. I sleep better knowing Accu-Disclose has my back."
"Having very little experience with debt disclosures, being able to work with Accu-Disclose, I’m confident that we have a qualified and reliable partner in keeping the County in compliance with our continuing disclosure obligations. Communications are timely and professional and it’s great to know that Accu-Disclose takes this off my plate each year.”
“The Accu-Disclose team is knowledgeable, responsive, and proactive, often alerting us to potential issues before they become problems. This level of service has allowed us to focus on our core operations with the peace of mind that our disclosure obligations are in capable hands. I highly recommend Accu-Disclose to any organization in need of reliable and efficient dissemination services."