New NABL president lays out priorities
PHOENIX – Alexandra “Sandy” MacLennan, who will become the National Association of Bond Lawyers' new president on Wednesday afternoon, expects NABL to update the model documents it provides for municipal transactions, keep close watch on federal developments, and place an increased focus on scholarly output going forward.
MacLennan, a partner at Squire Patton Boggs in Tampa, Fla., grew up primarily in Pittsburgh, Pa. The youngest of three daughters of a father, who was a Federal Bureau of Investigation agent, and a mother, who worked in advertising, she transferred from the University of Dayton to the University of Florida to be nearer to them when they retired there.
A journalism major as an undergraduate, MacLennan worked briefly as a reporter at a small Florida newspaper before her experiences covering the local court led her down the path to law school. While skeptical of the impact her individual effort as a journalist was having, MacLennan said she saw an opportunity to be a positive force in the legal profession.
“Being a lawyer,” she explained, “your ability and the amount of time you put into it does have direct results for your client.”
MacLennan went to law school at the University of Florida, but didn’t have public finance in mind at the time. “When I went to law school I didn’t have a clue what type of law I wanted to practice,” she said.
She went to work in the Orlando office of the firm then known as Akerman Senterfitt, joining its banking and corporate practice.
“My entry into bond finance was a partner walking into my office and dropping a stack of bond documents on my desk,” she said. “But I enjoyed it. It was like a big puzzle.”
MacLennan said she kept working in public finance because the firm’s small muni practice was enough to keep her busy and not many other lawyers wanted to do it, allowing her to effectively develop her own niche practice there. In 1989 she moved to Jacksonville and took a position with Squire, where she has been ever since.
Slightly more than half of her practice is in healthcare finance, but she also does a lot of work in disclosure and is the head of her firm’s internal disclosure group. That group of about 15 lawyers serves as a resource for Squire’s other public finance attorneys who have questions about disclosure. The majority of her work is in Florida and she is bond counsel to the State of Florida.
MacLennan said she believes NABL’s core mission is to provide support to its membership and that in the last several years a big part of that focus has been watching Congress and regulators as well as trying to provide education about the importance of tax-exempt financing.
An example of how NABL provides benefit for its members is the work the group did to provide new model documentation when the Treasury Department and Internal Revenue Service finalized the new issue price rules. MacLennan said she thought there was “a bit of angst” in the run-up to the effective date of the new rules in June, but the preparedness of NABL and other groups helped make the transition “rather smooth.”
Under the new rules, the issue price is the price at which the first 10% of a maturity of bonds is sold to the public. If 10% of a maturity is not sold at the sale date, issuers and dealers can use the initial offering price (IOP) as the issue price as long as the underwriters hold it for five business days after the sale date. For competitive sales, issuers and underwriters can treat the reasonably expected IOP of the bonds as the issue price as long as the issuer receives at least three bids for the bonds and meets certain other conditions. If three bids are not received, underwriters can still opt to hold the price for five days or wait until 10% of each maturity is sold.
“I think it has been smoother than people thought it would be. But I truly believe that’s because we were well-prepared,” she said.
MacLennan said she expects some tweaks to the model documents for issue price from both from NABL and the Securities Industry and Financial Markets Association. There was a certain assumption in the NABL documents, for example, that the “hold the price” rule would be secondary and not used particularly often.
But experience so far has shown that many underwriters are opting to hold the offering price for five business days to comply with the new rules, even if they are not doing advance refundings or other transactions where they have to know the issue price on the sale date. So there could be some reorganization of the documents to reflect that going forward.
NABL is also working on updates to its model indenture documents, has finished a new model underwriters' counsel letter, and is at work on a model disclosure counsel letter. The group will continue to stay abreast of federal developments on tax reform and other areas of interest to bond lawyers, she said.
But MacLennan said she also wants to see an increased emphasis on research and publications from NABL.
“Something that’s a slightly different approach to prior years, I would like to focus on the production of scholarly articles,” she said.
One such article already underway is a commentary on the U.S. Supreme Court’s opinion in Trinity Lutheran Church of Columbia, Inc. v. Carol S. Comer, director, Missouri Department of Natural Resources, a June decision in which the high court said Missouri could not deny a grant for a playground owned by a Lutheran church. The decision could widen access to public financing for sectarian religious organizations, lawyers have said. MacLennan said the publication is still in draft form, but would be under 20 pages long and would hopefully be published in a law review or similar publication soon.
“There is a lack of good guidance out there on some aspects of securities law,” she said, noting that the Securities and Exchange Commission generally has been hesitant to provide guidance on some topics such as how it views materiality and other questions posed to it by NABL over the years.
“Through the writing of scholarly articles that are well researched and documented and then published, that then creates a citable authority that can then support the issuance of legal opinions,” MacLennan said.
Another such article in its early stages will look at what laws and legal rulings have had to say about investor communications. Bond lawyers have been sometimes accused of inhibiting the more fulsome disclosure sought by regulators and analysts, MacLennan said, adding that this article could help clear up some questions for lawyers and investors.
MacLennan generally feels that muni disclosure is an evolving process that has come a long way in the past 20 years, but she is skeptical that the SEC should revisit its Rule 15c2-12 which says issuers must contractually agree to disclose annual financial and operating information as well as material events when they occur in order for underwriters to sell their bonds.
“I would be concerned that they might make it worse,” she said. “The tinkering that the SEC has done in the past I don’t think has added any clarity to the rule.”
MacLennan said she also has some concerns about the effect on disclosure of the SEC’s Municipalities Continuing Disclosure Cooperation initiative, which incentivized issuers and dealers to self-report instances in which issuers made misleading statements about their past compliance with continuing disclosure agreements. The program led to SEC settlements with 72 underwriters and 72 issuers before wrapping up late last year.
“My concern is that so much attention is paid to past continuing disclosure compliance that you might be missing something else,” MacLennan said. “That time would be better spent looking at other aspects of the deal.”
MacLennan will serve one year as NABL president, succeeding Cliff Gerber, a partner at Norton Rose Fulbright in San Francisco, before passing the torch at next year’s NABL meeting.