Law and regulation

Issuers are disclosing more failures to comply with their continuing disclosure agreements than in past months - a development some market participants said stems from a Securities and Exchange Commission's program encouraging them and their underwriters to self-report instances in which bond documents falsely stated the issuer was in compliance with its CDA.

A group of lawyers is urging the Treasury Department to modify its procedures for state and local government series securities so the department does not have to completely halt SLGS sales every time the federal government nears its congressionally-mandated debt limit.

Securities and Exchange Commission member Daniel Gallagher said Thursday that pension and other post-employment benefit liabilities need to be made more transparent for investors, and argued for a universal "disclosure baseline" that all cities should use.

Two members of Congress are urging federal regulators to reevaluate a proposal to exclude municipal bonds from qualifying as high quality liquid assets under banking rule designed to ensure banks are equipped to handle severe financial and economic stress.

Another broker dealer group is asking the Securities and Exchange Commission to suspend the Municipal Securities Rulemaking Board's proposal to charge each municipal advisor professional $300 per year, but non-dealer MAs are giving the MSRB's fee structure their support.

Securities and Exchange Commission attorney Peter Chan defended the commission's Municipalities Continuing Disclosure Cooperation Initiative Wednesday, telling issuer officials not to succumb to fear or confusion about the MCDC one day after the leader of a dealer group blasted the program.

A dealer group is urging the Securities and Exchange Commission to suspend and reject the Municipal Securities Rulemaking Board's proposal to charge each municipal advisor professional $300 per year, warning it is unfair to dealer firms that have already paid for rules the MSRB is developing for MAs.

Securities Industry and Financial Markets Association president and chief executive officer Kenneth Bentsen criticized recent efforts by the Securities and Exchange Commission to further regulate the muni market, telling issuer officials on Tuesday that a new rule and initiative could undermine productive relationships between municipalities and underwriters.

Despite the warm spring weather, industry concerns over the SEC's Municipal Continuing Disclosure Cooperative Initiative have begun to snowball.

The Securities and Exchange Commission has released new information on its municipal advisor rule that includes "transitional guidance" for market participants who had been anxious about providing advice to funds that might include bond proceeds.

Sharon Zackula has joined the Municipal Securities Rulemaking Board as an associate general counsel.

Market participants are divided over the Municipal Securities Rulemaking Board's proposal to require a qualifications exam for municipal advisors, with some wanting a uniform exam for all muni finance professionals and others wanting an approach more tailored to specific MA activities.

State and local officials are worried that small issuers of municipal bonds will be disproportionately exposed to the risk of enforcement action under the Securities and Exchange Commission's continuing self-reporting program on disclosure failures, and plan to pressure the commission to extend the initiative's deadline beyond its current Sept. 10 date and offer more guidance.

The Securities Industry and Financial Markets Association will help large issuers of municipal bonds pressure the Securities and Exchange Commission for a sophisticated issuer exemption from its municipal advisor rule, and will also request another delay in the rule's effective date if more guidance is not available soon.

The Government Finance Officers Association has released model language for issuer officials to use when interracting with broker-dealers and other entities under the municipal advisor rule.

Asset managers may have to register as municipal advisors to protect themselves from violating the Securities and Exchange Commission's MA rule, which places restrictions on advice concerning muni bond proceeds and other financial products commonly used by states and localities.

The Financial Industry Regulatory Authority censured and fined broker-dealer Tradition Asiel Securities, Inc. $20,000 for municipal trade reporting violations in a report that fails to mention $110,000 fines for other recent similar violations under “relevant disciplinary history.”

Issuers and underwriters might consider comprehensive reviews of all their deals stretching back a decade to determine if they might have disclosure failures worth voluntarily reporting to the Securities and Exchange Commission, securities law experts said Wednesday.

The Financial Industry Regulatory Agency's director of fixed income recently tried to dispel some myths about the agency's oversight of municipal advisors and detailed its plans for examinations.

The Municipal Securities Rulemaking Board got the go-ahead from the Securities and Exchange Commission to consolidate muni dealers' existing fair-pricing obligations into a single rule.