The Securities and Exchange Commission is soliciting public comments through Aug. 9 on a Municipal Securities Rulemaking Board proposal to change its EMMA site to reflect new materiality standards for continuing disclosures as well as changes to a list of event-based disclosures that borrowers may voluntarily submit to the system.
The proposal, which was published in the Federal Register yesterday, is to take effect on or before Dec. 1, the effective date of amendments to the SEC’s Rule 15c2-12, which prohibits dealers from underwriting municipal securities unless the issuer has contractually agreed to make continuing disclosures.
The amendments would expand a list of material events from 11 to 15, alter the materiality standard for certain events, and require that issuers disclose the events within 10 days of their occurrence rather than on a “timely basis.” The events must all be reported to Electronic Municipal Market Access site.
Under the proposal, EMMA would accept and make publicly available the following events: principal and interest payment delinquencies; non-payment related defaults, if material; unscheduled draws on debt service reserves or credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers or their failure to perform; and adverse tax opinions or Internal Revenue Service notices or events affecting the tax status of the security.
Other events include modifications to rights of security holders, if material; bond calls, if material; defeasances; release, substitutions or sale of property securing repayment of the securities, if material; rating changes; tender offers; bankruptcy, insolvency, receivership or similar events of the obligated person; merger, consolidation, or acquisition of the obligated person, if material; and the appointment of a successor or additional trustee, or the change of name of a trustee, if material.
Voluntary event-based disclosures would include but not be limited to amendments to continuing disclosure undertakings; changes in the obligated person; notices to investors pursuant to bond documents; certain communications from the IRS; secondary market purchases of the bonds; bids for auction-rate or other securities; capital or other financing plans; litigation or enforcement actions; changes of tender agent, remarketing agent, or other ongoing party; and derivative or other similar transactions.
The MSRB’s proposal has the support of the SEC staff and is likely to be approved by the commission.
In its filing with the SEC, the board said it does not believe the proposed rule change “will impose any burden on competition not necessary or appropriate.”