The Securities and Exchange Commission (SEC) proposed new rules to improve investor protection and enhance transparency in the municipal securities market.
The SEC requires municipal brokers and dealers to provide to the Municipal Securities Rulemaking Board (MSRB) timely notice of certain events. The new amendments would add two new event notices. According to the proposal, those event notices include “incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material; and Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties.”
The amendments are designed to better inform investors and other market participants about the current financial condition of issuers of municipal securities and obligated persons. The amendments also provide access to important information that could impact liquidity and overall creditworthiness of the entities.
“Today the SEC took steps to empower investors by improving their access to current information about the financial obligations incurred by municipal issuers and conduit borrowers,” SEC Acting Chairman Michael Piwowar said.
The public comment period will be open for 60 days following publication in the Federal Register.