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The Securities and Exchange Commission (SEC) adopted amendments to SEC Rule 15c2-12 in August that require issuers to notify the Municipal Securities Rulemaking Board (MSRB) of:

  • 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 new rules, published in the Federal Register on August 31, are scaled back from a much broader list of event notice requirements proposed in 2017. The final rules are much narrower than initially proposed.  Brokers and dealers that underwrite municipal securities are now required to reasonably determine that issuers comply.

The National Association of Health and Educational Facilities Finance Authorities (NAHEFFA), representing the authorities that issue tax-exempt bonds for nonprofit health-care, education, and other charitable purposes, had expressed concern with the 2017 proposal. It stated in a comment letter, “This cumulative regulatory burden, particularly when applied to the key market mechanism for funding capital projects for health care and education, may drive many smaller entities to less financially preferable solutions than tax exempt bonds if paperwork, reporting and other requirements by SEC, IRS and others becomes unbearable and underwriting and legal fees increase.”

The new rules go into effect October 30.


Liz Clark

Vice President, Policy and Research


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