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NALHFA 2011 Annual Educational Conference Vivian Benjamin

NALHFA 2011 Annual Educational Conference Vivian Benjamin. The Many Faces of Disclosure May 20, 2011 San Francisco, California. Rule 15c 2-12 Background.

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NALHFA 2011 Annual Educational Conference Vivian Benjamin

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  1. NALHFA 2011 Annual Educational ConferenceVivian Benjamin The Many Faces of Disclosure May 20, 2011 San Francisco, California

  2. Rule 15c 2-12 Background • SEC originally adopted 15c2-12 (“The Rule”) in 1989 as a means to improve the dissemination of information with primary offerings of municipal securities. • The Rule was subject to significant amendment in 1994. • The 1994 amendments implemented a requirement that broker-dealers (called “Participating underwriter” in the Rule) review the secondary market disclosure practices of the issuer at the time the securities are initially issued.

  3. December 2008 Amendments to Rule 15c2-12; New EMMA System • On December 5, 2008, the SEC (i) adopted amendments to the Rule (ii) issued its order granting approval of the proposed rule changes submitted by the Municipal Rulemaking Board (“MSRB”) in connection with their Electronic Municipal Market Access (“EMMA”) system (http://emma.msrb.org/).

  4. December 2008 Amendments to Rule 15c2-12; New EMMA System Established New SEC Submission Process Effective July 1, 2009. Eliminated Multiple Submission Repositories. Designated Single Submission Location and Mandated Electronic Filing. Provided for Continuing Disclosure Documents be Made Available to the Public for Free.

  5. What Do the Changes Mean? • Disclosure no longer filed at four NRMSIRs. • Disclosures to be filed solely with the Electronic Municipal Market Access (EMMA) System beginning July 1, 2009. • Filings to EMMA can include past annual financial filings and material event notices. • EMMA filings will satisfy issuer obligations under existing continuing disclosure agreements.

  6. SEC Changes to Rule 15c2-12 Requires Expanded Continuing Disclosure Agreements Beginning December 1, 2010 • The Rule Amendments expand the Rule to require Continuing Disclosure Agreements in primary offerings of previously exempt variable rate demand obligations • The Rule amendments add new event notices to Rule. • The Rule amendments provides a 10 business day period within which event notices must be filed and removes the general materiality condition to event notices

  7. Key Facts for Issuers, Obligors and Agent of Municipal Bonds • New System Began July 1, 2009 • Continuing Disclosures To be Filed Exclusively with EMMA (www.emma.msrb.org) • All Documents Must Be Filed Electronically • No Costs Associated with EMMA • No Multiple Filings to Multiple Locations • No New Disclosure Requirements

  8. What is EMMA? • Electronic Municipal Market Access System. • Free website with municipal bond disclosure documents, trade price and market data. • Single, centralized location for investors to access municipal bond information. • Created by Municipal Securities Rulemaking Board (MSRB) with support of the SEC. • Operated by the MSRB at www.emma.msrb.org

  9. What Information is on EMMA? • Official Statements for municipal bonds. • Real-time and historic municipal bond trade data. • Interest rate and auction results for municipal auction rate securities. • Daily market statistics and educational material about municipal bonds. • Coming July 1, 2009: issuer submission of continuing disclosures.

  10. Notice Events Must Be Filed With EMMA Within 10 Business Days of the Occurrence of Events • Principal and interest payment delinquencies • Non-payment of related defaults, if material • Unscheduled draws on debt service deserves reflecting financial difficulties

  11. Notice Events Must Be Filed With EMMA Within 10 Business Days of the Occurrence of Events • Unscheduled draws on credit • enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or • their fail to perform. • Adverse tax opinion, the issuance by the • Internal Revenue Service of proposed or final • determination of taxability.

  12. Notice Events Must Be Filed With EMMA Within 10 Business Days of the Occurrence of Events • Modification to rights of security holders, if material; • Bond calls, if material, and tender offers, • Defeasances; • Release, substitution, or sale of property securing repayment of the securities, if material; • Rating changes;

  13. Notice Events Must Be Filed With EMMA Within 10 Business Days of the Occurrence of Events • Bankruptcy, insolvency, receivership or similar event of the 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, and more.

  14. SEC Changes to Rule 15c2-12 Requires Expanded Continuing Disclose Agreements Beginning December 1, 2010 • The Rule Amendments Do Not Require the Amendment of Existing Continuing Disclosures Agreements. • The Rule Amendments Apply to Continuing Disclosure Agreements Entered into On or After the Compliance Date. • https://www.msrb.org/

  15. GOING FORWARD IMPACT OF NEW REQUIREMENTS OF THE DODD FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT/THE FINANCIAL REFORM ACT.

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