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SEC Modifies MCDC Terms: Extends Issuer Deadline to 12/01/2014, Lowers Penalty Cap for Small Underwriters; Recognizes Pre-EMMA Limitations

The Securities and Exchange Commission has announced modifications to the terms of its Municipalities Continuing Disclosure Cooperation (MCDC) Initiative. In a press release issued late in the afternoon July 31, 2014, the SEC modified the terms of the MCDC Initiative by:

1. Extending the deadline for Issuers and Obligated Persons to self-report until 5:00 p.m. EST December 1, 2014. The deadline for Underwriters remains unchanged at midnight September 9, 2014.

2. Reducing the penalty cap for small underwriters by adopting a tiered approach, based on the underwriter’s Annual Audited Report – Form X-17A-5 Part III for the underwriter’s fiscal year 2013, as follows:

For underwriters with 2013 reported total annual revenue of more than $100 million: $500,000;

For underwriters with 2013 reported total annual revenue between $20 million and $100 million: $250,000; and

For underwriters with 2013 reported total annual revenue of less than $20 million: $100,000.

3. Recognizing the flaws in the pre-EMMA NRMSIR system. Acknowledging that “some municipal underwriters and issuers have experienced difficulties in identifying potential violations” in reviewing compliance during the pre-EMMA years, “the division  will consider reasonable, good faith, and documented efforts” made by self-reporters in deciding whether to recommend enforcement action and, to the extent enforcement action is recommended, in determining relief for “violations identified by the division after the expiration of the initiative.”

For a copy of the SEC Press Release, click here.

© 2021 Bracewell LLPNational Law Review, Volume IV, Number 216
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About this Author

Paul S. Maco, Bracewell Law Firm, Securities Attorney
Partner

Paul Maco practices in the areas of federal securities and commodities law, corporate governance, and public finance. A former senior official at the U.S. Securities and Exchange Commission (SEC), his transactional, regulatory, enforcement and enforcement defense experience brings a comprehensive perspective to the needs of his clients, whom he represents before the SEC, Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB) in enforcement, regulatory, and compliance matters.

Paul defends states,...

202-828-5821
Britt Cass Steckman, Securities Attorney, Bracewell Law Firm
Associate

Britt Steckman focuses her practice on federal securities law, public finance, and civil litigation. Her clients include broker-dealers and municipal securities dealers, large and medium sized investment banks, and municipal issuers. Britt advises these clients on compliance matters, conducts internal investigations, defends enforcement actions, and advises on municipal securities transactions.

202-828-5831
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