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SEC Amends Disclosure Obligations in Municipal Securities Market

The Securities and Exchange Commission has adopted new disclosure requirements for participants in the municipal securities market. As background, Rule 15c2-12 under the Securities Exchange Act of 1934 requires each broker, dealer and municipal securities dealer that acts as an underwriter in a primary offering of municipal securities with an aggregate principal amount of $1,000,000 or more (unless subject to an exception or exemption) to reasonably determine that an issuer or an obligated person has agreed to provide to the Municipal Securities Rulemaking Board timely notice of 14 enumerated events. These events include, among other things, a merger, consolidation, acquisition or asset sale involving an obligated person, delinquencies on principal or interest payments, and various other events that may signify financial distress affecting the offering.

The SEC has amended Rule 15c2-12 to require timely notice of two additional events:

(15) Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material; and

(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

The amended rule will become effective 60 days after publication in the Federal Register. However, the amended rule will affect only offerings that occur on or after the compliance date, which will be 180 days after the rule’s publication in the Federal Register.

The SEC has provided a fact sheet, which is available here. The amended rule is available here.

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About this Author

Janet M. Angstadt, Securities, Financial Services, Chicago, Lawyer, Katten Law FIrm
Partner

Janet M. Angstadt is the head of Katten's Chicago Financial Services practice. She focuses her practice on broker-dealer and exchange compliance issues and advises companies on matters regarding compliance with the regulations of the US Securities and Exchange Commission (SEC) and self-regulatory organizations (SROs).

Janet represents clients in a wide range of legal and regulatory matters, including mergers and acquisitions, SRO investigations, compliance issues related to registrations, sales practice, short sales, Regulation NMS, market-making and...

312.902.5494
James M. Brady, Katten Muchin Law Firm, Finance Attorney
Associate

James Brady concentrates his practice in financial services matters.

While in law school, James was an editor of the Michigan Journal of International Law. He also served as a judicial intern to the Honorable Stephen J. Markman of the Michigan Supreme Court. http://www.kattenlaw.com/James-Brady

312-902-5362