BRADENTON, Fla. - Louisiana's municipal bond issuers should take advantage of the Securities and Exchange Commission's self-reporting disclosure program, the State Bond Commission urged Thursday.
The SEC's Municipalities Continuing Disclosure Cooperation Initiative is an advantageous program, the SBC said at its regularly scheduled meeting.
"The state is working very hard to take full advantage, not in the pejorative sense, of MCDC," said State Treasurer John Kennedy, who is chairman of the Bond Commission, which approves debt issued by parishes, municipalities, special taxing districts, and other political subdivisions of the state, as well as the state itself.
MCDC gives issuers until the end of Sept. 9 to report continuing disclosure lapses, and get favorable treatment, the commission's financial advisor, Renee Boicourt of Lamont Financial Services, said in a presentation.
Boicourt reviewed the SEC's disclosure requirements, under which issuers must contractually agree to disclose annual financial and operating information, as well as material event notices, in order to get dealers to underwrite their bonds.
"A number of issuers perhaps overcommitted or didn't monitor their commitment very well and compliance was quite varied, and in some cases quite poor," she said.
In some cases issuers provided misleading information, said Boicourt, who added that the SEC has taken enforcement actions against some.
The MCDC initiative allows issuers and underwriters to "voluntarily confess their sins, if you will," she said. "If they do, they will be treated lightly and not subject to the same penalties than if the SEC discovered them through their investigation."
Boicourt said local issuers need to go through all transactions over the last five years, and on the oldest of those five offerings go back another five years, and catalog instances where there was non-compliance with continuing disclosure agreements. The state is currently doing this, she added.
The non-compliance list can be taken to the MCDC program.
For "the localities out there, it's very much in their interest to do this voluntarily because if they ignore it their underwriters will definitely report their failings," she said.
Lela Folse, director of State Bond Commission, said a memorandum and handout on the MCDC initiative would be mailed to all local issuers.
The SBC has hired Foley & Judell and Breazeale Sachse & Wilson as disclosure counsel to assist with its MCDC report, if needed.
The commission also went into closed session Thursday to discuss legal strategy for the upcoming trial with the Department of Justice over a federal housing discrimination lawsuit.
After the closed session, the commission voted to authorize its attorney to renegotiate a potential settlement with the DOJ "within the parameters of those discussed in executive session."
The parameters were not made public, but will be discussed at a lawsuit status conference with the judge on Aug. 28. The SBC previously rejected a settlement in the case because it required an admission that federal housing laws had been broken, among other things.
