The MSRB is finalizing some user-friendly enhancements to the Electronic Municipal Market Access (EMMA) website, the website designated by the US Securities and Exchange Commission as the official source for municipal securities data and disclosure documents. The enhancements follow new continuing disclosure rules that will increase the volume of information required to be disclosed on EMMA. The MSRB expects that the enhancements will make it easier for issuers and obligated persons to submit information, and for the public to access it. The enhancements should roll out for public use this summer.
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Last week amendments to the SEC continuing disclosure rules for municipal bonds went into effect. Under the new rules, municipalities that are planning a public offering of municipal bonds must update their continuing disclosure agreements to include covenants to disclose each of the following:

  • Incurrence of a financial obligation of the obligated person, if material,

After months of deliberation, on August 20, 2018, the U.S. Securities and Exchange Commission (the “SEC”) announced its final approval of new amendments (the “2018 Amendments”) to Rule 15c2-12, 17 C.F.R. §240.15c2-12 (herein, “Rule 15c2-12” or the “Rule”). Rule 15c2-12 requires dealers, when underwriting certain types of municipal securities, to ensure that “obligated persons” enter into a written commitment (called a continuing disclosure agreement, or “CDA”) to make periodic disclosure filings to the Municipal Securities Rulemaking Board (the “MSRB”). An “obligated person” means any person, including the issuer, that supports the payment of all or part of the obligations on municipal securities to be publicly offered for sale.
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On August 20, 2018 the SEC approved amendments to Rule 15c2-12 of the Securities Exchange Act to add two additional disclosure events to written continuing disclosure undertakings required to be obtained by underwriters in primary securities offerings. A copy of the final rule approving the amendments can be accessed here.
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When Congress passed the Tax Cuts and Jobs Act (TCJA) late last year, a much-heralded provision of TCJA was the reduction in the federal corporate income tax rate, from 35% to 21%. However, that reduction has had unforeseen consequences for the municipal bond industry. The reduction in the tax rate is expected to result in efforts by banks to increase the interest rates charged by banks for current outstanding loans to municipalities and 501(c)(3) tax-exempt organizations. Whether a bank may increase the interest rate on a loan will depend on the language of the loan documents. Even if the loan documents permit the bank to unilaterally increase the interest rate, some banks may be hesitant to do so, as the request is may be received poorly, potentially jeopardizing the bank’s ongoing relationship with the borrower.
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Following his inauguration on January 20th, President Trump issued several Executive Orders, one of which was issued on January 25, 2017 and titled, “Enhancing Public Safety in the Interior of the United States” (referred to herein as the “Order”). Among other things, this Order punishes so-called “sanctuary jurisdictions” by stripping them of federal grants. As justification for this punitive measure, the Order states that “sanctuary jurisdictions … willfully violate Federal law in an attempt to shield aliens from removal…. These jurisdictions have caused immeasurable harm to the American people and to the very fabric of our Republic.”

In the months since the Order, many state and local entities have parsed the Order to determine whether they would be considered a “sanctuary jurisdiction,” what funding may be in jeopardy, and whether they can modify their policies to limit or eliminate application of the Order. In the midst of these uncertainties, many municipalities also have been faced with the issue of how to address the potential consequences of “sanctuary jurisdiction” status in their public offering documents when they are considering issuing municipal bonds for sale to the investor public.


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