WASHINGTON — Since Securities and Exchange Commission Rule 15c2-12's amended event notice requirements went into effect in February, issuers have filed 169 of the two newly-required types of disclosures on the Municipal Securities Rulemaking Board's EMMA site.
The MSRB's first quarter statistical summary released Tuesday reported, among other market data, the numbers of EMMA submissions for all events reported under 15c2-12. The numbers showed 167 submissions under new Event 15, and two under new Event 16. In the past, the new events sparked some confusion among issuers and anxiety about complying with them persisted right up until the effective date. The data indicates that issuers may have a growing understanding of Event 15, sources said.
“It shows that there are new bonds coming to market and there is significant compliance and understanding of what a 15 event is," said Emily Brock, director of the federal liaison center for the Government Finance Officers Association.
Event 15 says issuers have to disclose when they incur financial obligations, if material, as well as agreements to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer that could affect security holders.
Event 16 says that in connection with those financial obligations, issuers have to disclose events which “reflect financial difficulties” such as a default or modification of terms.
Event 16 events show up less often since it would just show financial difficulties and those happen less often than new financial obligations.
The SEC lacks the authority to directly regulate issuers except through the antifraud provisions in the securities laws, so 15c2-12 requires underwriters of new issues of $1 million or more to “reasonably determine” that the issuer has entered into a written agreement to provide the described disclosures to bondholders.
The MSRB also found the most actively traded securities were recently restructured bonds from the Puerto Rico Sales Tax Financing Corporation accounted for the top 11 most traded securities with 37,000 trades in the first quarter.
A revenue bond from the Industrial Development Board of the Parish of East Baton Rouge was the most actively traded security with $6.8 billion in the first quarter.
