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SEC Approves Two Additional Material Event Disclosures

Issuers and borrowers who enter into continuing disclosure undertakings in connection with the offering of municipal securities will be required to report two new material events beginning sometime in the first quarter of 2019.  In certain circumstances, the changes may be applicable to issuers and borrowers with existing continuing disclosure undertakings.  The Securities and Exchange Commission (SEC) recently announced an amendment to Rule 15c2-12 of the Securities Exchange Act (Rule 15c2-12) which finalizes two previously proposed additions to the existing list of material events for which issuers and borrowers are required to provide public notice. 

According to a report of the Federal Deposit Insurance Corporation on financial institutions around the country, the dollar amount of commercial loans to state and local governments has tripled since 2010.  With the rise of private placements and direct purchases in recent years, the SEC is aiming to enhance transparency with respect to these obligations, which are not currently subject to Rule 15c2-12.  “Disclosures required by these rule amendments will better equip investors and intermediaries to make informed investment decisions about municipal securities,” said SEC Chairman Jay Clayton.

Under Rule 15c2-12 issuers and borrowers with certain publicly offered debt must agree to (i) annually post selected financial and operating information on the Electronic Municipal Market Access system (EMMA) maintained by the Municipal Securities Rulemaking Board (MSRB) and (ii) provide timely notice of certain material events. With the amendment to Rule 15c2-12, two new events are being added to the list of existing material events, specifically:

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

•Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties.

The amendment defines “financial obligation” as a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) a guarantee of (i) or (ii), but financial obligation does not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12.  The amendment does not define “materiality” in the context of a financial obligation. 

According to the SEC, the amendment to Rule 15c2-12 is meant “to enhance transparency in the municipal securities market,” and that the amendment “focus[es] on material financial obligations that could impact an issuer’s liquidity, overall creditworthiness, or an existing security holder’s rights.”   The amendment to Rule 15c2-12 will go into effect 180 days after publication in the Federal Register, but in any case, not earlier than the first quarter of 2019. 

View the SEC press release and the SEC adopting release (final rule) here.

© 2022 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume VIII, Number 236

About this Author

Jennifer R. Blaser, Dinsmore law firm, Bond Underwriting Lawyer, Public Finance Attorney

With experience in many aspects of public finance law, Jennifer Blaser serves as bond and underwriters counsel in numerous traditional governmental financing transactions. Specifically, her focus includes working with cities, counties, townships and school districts throughout the State of Ohio to finance their capital projects.

As bond counsel, Jennifer has facilitated bond and note issues for traditional governmental projects such as primary and secondary education, fire and public safety buildings and equipment, building improvements and...

(614) 233-5391
Michael T. Dean, Dinsmore, Public Finance Lawyer, Economic Development Attorney

Michael T. Dean is an associate in Dinsmore’s Cincinnati office, where he practices in the firm’s Traditional Governmental Finance and Economic Development practice areas within the Public Finance group. The attorneys in these practice areas assist a variety of state and local government entities to structure financing transactions for an array of publicly-financed projects through the use of tax-exempt, taxable and tax increment financing.

As a member of the Public Finance group, Michael brings extensive finance experience to bear for his...

(513) 977-8180
Mary S. Duffey, Dinsmore, Structured Taxable Financing Lawyer, Housing Authorities Attorney

With over 20 years experience in public finance, Mary Duffey represents issuers, underwriters, banks and trustees in tax-exempt and structured taxable financings. Her public body clients have included state agencies, counties, cities, port authorities, conservancy districts, housing authorities and special financing districts.

Ms. Duffey’s familiarity with a wide variety of structures and market participants enables her to apply the most sophisticated financing techniques to her clients' public finance and structured taxable transactions.

(614) 233-5401
Sean C. Garin, Finance lawyer, Dinsmore

Sean represents local government clients, including school districts and municipal authorities and concentrates his practice on tax-exempt financing of municipal projects, including schools, municipal buildings and recreational facilities. He also represents several commercial banks in tax-exempt transactions.


  • Duquesne University School of Law  (J.D., cum laude, 2005)
  • Allegheny College  (B.S., cum laude, 1997)
    • Environmental Science
(412) 288-5856
Marc T. Kamer, Dinsmore, Public Education Projects Lawyer, Healthcare Providers Attorney

Marc Kamer, a partner in the Columbus, Ohio office, handles a wide variety of project financings for traditional governmental purposes, like roads and bridges, and tax-exempt financings for 501(c)(3) organizations such as healthcare providers, institutions of higher education and private K-12 schools.

Marc’s experience also includes authoring legislation relating to finance and construction initiatives and amendments to modernize existing finance and construction programs. He also devotes a substantial amount of his time to economic development...

(614) 224-5205