MSRB will discuss disclosure after Kennedy criticisms

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WASHINGTON — The Municipal Securities Rulemaking Board is defending itself after it came under fire from Sen. John Kennedy over the issue of late disclosures filed to the MSRB's EMMA website.

Kennedy, R-La., criticized the board during a Tuesday hearing at which Securities and Exchange Commission Chairman Jay Clayton testified on a variety of issues including the timeliness of financial statements released by municipal issuers.

Kennedy asked Clayton why the MSRB allows issuers to file annual financial information or audited financial statements as many as 188 to 200 days after the end of their fiscal years.

“Why is MSRB allowing that to happen?” Kennedy said. “Are they doing anything over there besides standing around and sucking on their teeth?”

Clayton said it was an area for improvement.

“The first step in improving it is to make sure that investors understand that the financial statements they are looking at in some cases are 18 months old,” Clayton said. “That’s pretty old.”

The MSRB wrote in an email response that it does not have rulemaking authority over muni issuers.

“That being said, we share both Senator Kennedy’s and Chairman Clayton’s interest in improved timeliness of municipal disclosure,” wrote MSRB President and CEO Lynnette Kelly.

Kennedy, who was Louisiana treasurer from 2000 until assuming his Senate seat in January 2017, applied to become an MSRB board member in both 2011 and 2013 but was not chosen. He had choice words for the board earlier this year during a hearing to confirm Elad Roisman as an SEC commissioner, blasting the self-regulator as "incestuous" for selecting members to represent the public who seemingly have close industry ties.

The Dodd-Frank Act, enacted in 2010, mandated that the MSRB have a majority public board. The MSRB, not wanting to kick any of its members off the board at that time, raised the number of board members to 21 from 15. Eleven of the 21 are supposed to be public representatives and the remaining 10 are to represent banks, broker-dealers, and municipal advisors.

In January, the MSRB board of directors will discuss possible steps within their jurisdiction, Kelly said.

Kennedy also made comments Tuesday about the MSRB's data dissemination, asking Clayton if he was aware that the board "charges $60,000" to download data. Clayton said he was not aware of that. It is unclear to what Kennedy was referring, and his office did not respond to a request for an explanation.

“The MSRB makes all current transaction and disclosure data freely available on the EMMA website, and has statutory authority to provide, for commercially reasonable fees, automated subscription-based feeds of historical data whose storage and retrieval requires maintenance and investment,” Kelly said. “The MSRB also makes a special municipal market data product available to academic researchers for a nominal fee and the MSRB’s historical data products are available to academics and nonprofits, typically at no charge.”

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Securities law MSRB rules SEC enforcement Jay Clayton SEC MSRB Washington DC