February 25, 2020

February 24, 2020

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SEC Contacting Issuers Regarding MCDC Settlements

If you are an issuer of municipal securities and elected to self-report potential disclosure obligation violations with respect to such securities under the MCDC Initiative, the U.S. Securities and Exchange Commission (SEC) may contact you regarding a proposed settlement offer related to such violations.

On February 10, 2016, the Government Finance Officers Association (GFOA) alerted its members that the SEC has begun to propose settlement offers to issuers of municipal securities that self-reported potential violations of disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation Initiative (MCDC Initiative) in 2014.

As a condition to the public offering of municipal securities, issuers of such securities are generally obligated to disclose certain financial information and operating data, as well as the occurrence of certain events, on an annual basis while those securities are outstanding. As a result of perceived shortcomings in issuers meeting their continuing disclosure obligations, the SEC introduced the MCDC Initiative, which offered underwriters and issuers of municipal securities the opportunity to self-report potential violations of disclosure obligations during the past five years in exchange for more lenient settlements than would otherwise be available for violations which were not self-reported. While underwriters are subject to monetary penalties under the MCDC Initiative, issuers are in most cases subject only to non-monetary settlement arrangements. The opportunity to self-report such potential violations with respect to issuers ended on December 1, 2014.

The SEC recently completed its third and final round of settlements with respect to underwriters and is beginning to contact those issuers who have self-reported under the MCDC Initiative regarding settlements. In its alert, GFOA warns issuers that the SEC is providing only short time frames, as little as one week in some cases, to dispute any facts regarding and to decide whether or not to agree to a proposed settlement, though the SEC has clarified that an extension will be granted upon request. In any case, if you have self-reported potential disclosure obligations under the MCDC Initiative and are contacted by the SEC regarding a related settlement, please contact us as soon as possible to discuss the resolution of any such proposed settlements.

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About this Author

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
Bradley N. Ruwe, Dinsmore, Public Finance Projects Lawyer, Government entities Attorney

Brad Ruwe is known for his insightful analyses of public finance projects from both economic and legal perspectives. Mr. Ruwe serves as bond counsel, underwriter's counsel, bank counsel and special counsel.

With over 17 years' experience in public finance, Mr. Ruwe has been serving as counsel in the following areas: government finance, school finance, 501(c)(3)/health care finance, economic/industrial development finance and municipal leasing. Mr. Ruwe handles both governmental and conduit transactions and is regularly called upon to address governmental and quasi-governmental councils, boards and authorities on public finance issues.

(513) 639-9237
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
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
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