The Securities and Exchange Commission’s municipal bond office has sent a so called “no-action” letter to NetRoadshow Inc., paving the way for it and its underwriter clients to present Internet-based “road shows” on municipal bond offerings to retail investors.
In a Jan. 29 letter obtained by The Bond Buyer, John Cross, director of the SEC’s muni office, said the office’s staff “will not recommend enforcement action to the commission” against NetRoadshow for conducting shows for retail muni investors as long as certain conditions are met.
Cross said in his letter that Atlanta-based NetRoadshow must conduct the shows as described in the firm’s Jan. 25 relief request and in a way that does not run afoul of the SEC’s Rule 15c2-12 on disclosure or the Municipal Securities Rulemaking Board’s rules on offering statements.
Robert Totman, NetRoadshow’s New York-based managing director of global sales, said the SEC’s response will allow the firm to move forward with plans to host shows for retail muni investors.
“This clarifies the ability of the issuers’ to post the presentation [online] directly to the retail audience, which are the primary buyers of munis bonds,” he said.
Road shows are marketing presentations developed by issuers that typically are coordinated by underwriters. Designed to generate interest from potential investors, they often include slides, written materials about terms and audio recordings of issuer officials discussing the offering, Totman said.
Historically, road shows were primarily held in person. But for the last 15 years they have increasingly been web-based, he said.
Most of these have been held for retail investors, sources said.
NetRoadshow already hosts online shows for investors in corporate securities and for institutional investors in munis.
But the firm, concerned about implications of SEC and MSRB rules, wanted the commission’s guidance before hosting shows for muni retail investors.
In a Jan. 25 request, Dennis O. Garris, a lawyer with Alston & Bird LLP, which is representing NetRoadshow said he feared the shows could be considered part of an issuers’ official statement under the Rule 15c2-12. He also noted that dealers must file official statements with the MSRB no later than the closing date of the transaction and must send the statements to customers no later than the settlement data, as required by the MSRB’s Rule G-32 on disclosure.
“We do not believe that an electronic road show should be deemed to be part of the official statements,” Garris said.
He added, “We respectfully request that the staff confirm [it] will not recommend enforcement action to the commission against [NetRoadshow] or its clients under the provisions in Rule 15c2-12.”
The shows will not include information that conflicts with official statements, and will include PDF copies of the statements and links to the MSRB’s EMMA system, he wrote in the letter.
In addition, he said, the firm will not provide investment advice or analysis and will be paid a flat fee not contingent on the completion or size of the offering.
Totman said the first shows for retail muni investors will likely be hosted in the next several months on the website
