[Federal Register Volume 75, Number 164 (Wednesday, August 25, 2010)]
[Notices]
[Pages 52383-52384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21082]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62742, File No. SR-MSRB-2010-05]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Approving Proposed Rule Change Relating to the Continuing
Disclosure Service of the MSRB Electronic Municipal Market Access
(EMMA) System
August 19, 2010.
On June 30, 2010, the Municipal Securities Rulemaking Board
(``MSRB''), filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change relating to the continuing
disclosure service of the MSRB Electronic Municipal Market Access
(EMMA) System. The proposed rule change was published for comment in
the Federal Register on July 19, 2010.\3\ The Commission received one
comment letter.\4\ This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 62489 (July 13,
2010), 75 FR 41909 (July 19, 2010) (``Commission's Notice'').
\4\ See letter from Steve Apfelbacher, President, National
Association of Independent Public Finance Advisors (``NAIPFA''),
dated August 9, 2010.
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Currently Exchange Act Rule 15c2-12 provides that an underwriter
for a primary offering of municipal securities subject to Exchange Act
Rule 15c2-12 is prohibited from underwriting the offering unless the
underwriter has determined that the issuer or an obligated person for
whom financial information or operating data is presented in the final
official statement has undertaken in writing to provide certain items
of information to the MSRB. Such items include: (A) Annual financial
information; (B) audited financial statements if available and if not
included in the annual financial information; (C) notices of certain
events (``Rule 15c2-12 Event Notices''); \5\ and (D) notices of
failures to provide annual financial information on or before the date
specified in the written undertaking. Written undertakings are to
provide that all continuing disclosure documents submitted to the MSRB
shall be accompanied by identifying information as prescribed by the
MSRB. Such submissions are made by issuers, obligated persons and their
agents to the MSRB through the EMMA continuing disclosure service and
are made available to the public through the EMMA Web site for free and
through paid subscriptions.
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\5\ Under Exchange Act Rule 15c2-12(b)(5)(i)(C), notices of the
following events currently are required to be submitted to the MSRB,
if material: principal and interest payment delinquencies; non-
payment related defaults; unscheduled draws on debt service reserves
reflecting financial difficulties; unscheduled draws on credit
enhancements reflecting financial difficulties; substitution of
credit or liquidity providers, or their failure to perform; adverse
tax opinions or events affecting the tax-exempt status of the
security; modifications to rights of security holders; bond calls;
defeasances; release, substitution, or sale of property securing
repayment of the securities; and rating changes.
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The Commission has recently amended Exchange Act Rule 15c2-12 to
modify several provisions relating to the
[[Page 52384]]
submission of continuing disclosures to the MSRB (the ``Rule 15c2-12
Amendment'').\6\ The Rule 15c2-12 Amendment, among other things, (1)
Removes the exemption from the continuing disclosure provisions of
Exchange Act Rule 15c2-12 for demand securities; \7\ (2) modifies
Exchange Act Rule 15c2-12 to establish a timeliness standard for
submission of Rule 15c2-12 Event Notices of ten business days after the
occurrence of the event; (3) deletes the general materiality condition
for certain of the Rule 15c2-12 Event Notices; (4) modifies the
language of the Rule 15c2-12 Event Notice regarding adverse tax events;
\8\ and (5) adds new Rule 15c2-12 Event Notices.\9\
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\6\ See Release No. 34-62184A; File No. S7-15-09 (May 26, 2010).
\7\ Currently primary offerings for demand securities as
described in Exchange Act Rule 15c2-12(d)(1)(iii) are exempt from
the requirements of Exchange Act Rule 15c2-12.
\8\ The Rule 15c2-12 Amendment expands the current language of
such Rule 15c2-12 Event Notice category to include adverse tax
opinions, the issuance by the IRS of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form
5701-TEB) or other material notices or determinations with respect
to the tax status of the security or other material events affecting
the tax status of the security.
\9\ The Rule 15c2-12 Amendment includes the following new Rule
15c2-12 Event Notices: Tender offers; bankruptcy, insolvency,
receivership, or similar event of the issuer or obligated person;
the consummation of a merger, consolidation, or acquisition
involving an obligated person or the sale of all or substantially
all of the assets of the obligated person, other than in the
ordinary course of business, the entry into a definitive agreement
to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its
terms, if material; and the appointment of a successor or additional
trustee, or the change of name of a trustee, if material.
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To permit issuers and obligated persons to meet the provisions of
the Rule 15c2-12 Amendment on or prior to the compliance date of
December 1, 2010 established under the Rule 15c2-12 Amendment, this
proposed rule change would modify the language of the EMMA continuing
disclosure service to reflect the materiality standard changes under
the Rule 15c2-12 Amendment and would modify the list of voluntary
event-based disclosures that may be submitted to the EMMA continuing
disclosure service to reflect changes in the list of Rule 15c2-12 Event
Notices made by the Rule 15c2-12 Amendment.\10\
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\10\ The existing language of the EMMA continuing disclosure
service would incorporate the changed list of Rule 15c2-12 Event
Notices made by the Rule 15c2-12 Amendment by reference to the then-
current provisions of Exchange Act Rule 15c2-12 and therefore no
change in the language of the EMMA continuing disclosure service
would be made. In addition, the removal of the exemption for demand
securities from the continuing disclosure provisions of Exchange Act
Rule 15c2-12 does not require changes to the EMMA continuing
disclosure service in order to permit submission of disclosures in
connection with demand securities.
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The MSRB has requested an effective date for the proposed rule
change of a date to be announced by the MSRB in a notice published on
the MSRB Web site, which date shall be no later than December 1, 2010
and shall be announced no later than five (5) business days prior to
the effective date. A full description of the proposal is contained in
the Commission's Notice.
The Commission received one comment letter supporting the
proposal.\11\ NAIPFA does not believe the proposed rule change to allow
the MSRB to modify EMMA to accommodate the Rule 15c2-12 Amendment will
impose any undue burden on issuers. In addition, NAIPFA agrees that the
proposed changes are consistent with the Exchange Act and will
effectuate the Commission's recent Rule 15c2-12 Amendment.
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\11\ See supra note 4.
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The Commission has carefully considered the proposed rule change
and finds that the proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to the MSRB \12\ and, in particular, the
requirements of Section 15B(b)(2)(C) of the Exchange Act \13\ and the
rules and regulations thereunder. Section 15B(b)(2)(C) of the Exchange
Act requires, among other things, that the MSRB's rules be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in municipal securities, to remove impediments to and perfect the
mechanism of a free and open market in municipal securities, and, in
general, to protect investors and the public interest.\14\ In
particular, the Commission finds that the proposed rule change is
consistent with the Exchange Act because it effectuates the
Commission's Rule 15c2-12 Amendment under the Exchange Act. In
addition, the proposed rule change serves to remove impediments to and
help perfect the mechanisms of a free and open market in municipal
securities and would serve to promote the statutory mandate of the MSRB
to protect investors and the public interest. The proposed rule change
would aid in providing additional information for making investment
decisions more easily accessible to all participants in the municipal
securities market on an equal basis throughout the life of the
securities without barriers to obtaining such information. Broad access
to additional continuing disclosure documents through the continuing
disclosure service of EMMA should assist in preventing fraudulent and
manipulative acts and practices by improving the opportunity for public
investors to access material information about issuers and their
securities.
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\12\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78o-4(b)(2)(C).
\14\ Id.
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The proposed rule change will become effective on the date
requested by the MSRB.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\15\ that the proposed rule change (SR-MSRB-2010-05), be,
and it hereby is, approved.
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\15\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-21082 Filed 8-24-10; 8:45 am]
BILLING CODE 8010-01-P