Municipal Issuers and Underwriters: Have You Made Your Continuing Disclosures?
The SEC offered a safe harbor period until December 1, 2014 that allowed for self-reporting of failure to comply with MSRB Rule 15c2-12, or the Municipal Continuing Disclosure Cooperation Initiative (MCDC), and has recently solicited comments on the impact of the rule on issuers and underwriters.
The MCDC requires issuers and underwriters of municipal securities to provide continuing disclosure to the marketplace in several forms:
- Disclosure of audited financials annually, on a timely basis
- Disclosure of material events impacting the issuing entity within 10 business days of the event
- Report whether the disclosure procedures stated in the Preliminary and Final Official Statements were followed.
What You Should Do:
The deadline for the safe harbor offering issuers and underwriters an opportunity to self-report without penalty any failure to comply just passed; however, the SEC is still asking for comment regarding the rule and its impact on firms and issuers. In order to understand the rule and its impact, issuers should educate themselves about the requirements, determine the subsequent importance of disclosure compliance, and understand the consequences of failing to comply.
Specifically, issuers and underwriters should:
- Assess their current approach to 15c2-12 MCDC regulation, including policies and procedures and supervisory controls already in place, and make recommended changes
- Evaluate previous MCDC compliance to determine areas that require review, development and/or enhancement
- Review MCDC compliance in previous Official Statements to understand the assurances you’ve made regarding continuing disclosure
- Ensure that personnel are educated and trained to follow policies and procedures and supervisory controls, in order for your firm to remain compliant
- Assess future compliance needs with regards to MCDC regulations
- Consider how to address known MCDC regulation failures
- Cooperate with any investigation regarding false statements, including roles of individuals and/or other parties involved
- Provide compliance certifications one year after the date of the beginning of the proceedings
How Oyster Can Help:
Oyster Consulting can help you manage and understand your risk on the 15c2-12 MCDC initiative. We stand ready to audit your current approach to complying with the requirement to provide continuing disclosure on municipal issuance and underwritings.
Our review includes examining your policies and procedures, an audit of previous compliance, and a review of MCDC compliance in previous Official Statements. Our review can also include the creation of detailed Policies & Procedures to help manage compliance with 15c2-12 in the future. For more information on MCDC regulations, please contact Oyster Consulting and one of our consultants will be happy to help you. Oyster has served as independent consultant on numerous regulatory settlements, and we can assist those firms that enter into Municipal Disclosure settlements.
Oyster Consulting, LLC
4128 Innslake Dr
Glen Allen, VA 23060