GFOA updates disclosure best practices

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PHOENIX — The Government Finance Officers Association has approved two new and updated best practices on disclosure and compliance, urging issuers to establish clear policies and procedures in the primary as well as secondary markets.

The GFOA issues best practices to guide its members with policies that members of GFOA committees have found successful over time, though members are in no way bound to follow them. The newest best practices, which the GFOA announced late last week, stress the importance of careful communication with the market as well as with post-issuance compliance, two areas regulators have focused on recently.

The primary market disclosure best practice recommends that “issuers establish clear policies and procedures for compiling information before issuing debt. Issuers are to carefully consider information that may be material to investors when compiling primary market information.”

Regulators have established that they have concerns with how issuers communicate with investors in the primary market, with the Municipal Securities Rulemaking Board in September urging issuers to be careful to avoid “selective disclosure” of certain information only to certain investors.

The post-issuance best practice urges issuers to “adopt formal, written post-issuance compliance policies and procedures to assist in meeting compliance requirements,” among other things. Post-issuance compliance has been a topic of intense discussion for years, but especially since the Securities and Exchange Commission’s Municipalities Continuing Disclosure Cooperation initiative, which emphasized that issuers could and will continue to face penalties if they issue bonds and fail to disclose problems with their secondary market disclosure.

“These practices should be proactive steps that a government should be taking and are applicable to all governments,” the GFOA said.

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Securities law Municipal disclosure GFOA Washington DC