
[Federal Register: April 29, 2009 (Volume 74, Number 81)]
[Notices]               
[Page 19612-19614]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ap09-147]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59814; File No. SR-MSRB-2009-04]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to the 
Voluntary Submission of Continuing Disclosure Documents to Its Upcoming 
Continuing Disclosure Service of the Electronic Municipal Market Access 
System (EMMA[supreg])

April 23, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 14, 2009, the Municipal Securities Rulemaking Board (``MSRB'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by the MSRB. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB has filed with the Commission a proposed rule change to 
amend the continuing disclosure service of the MSRB's Electronic 
Municipal Market Access system (``EMMA'') to accept, and to make 
publicly available on the Internet, voluntary electronic submissions by 
issuers, obligated persons and their agents of continuing disclosure 
documents provided other than in connection with Exchange Act Rule 
15c2-12. The MSRB has requested approval of the proposed rule change on 
or prior to July 1, 2009.
    The text of the proposed rule change is available on the MSRB's Web 
site (http://www.msrb.org/msrb1/sec.asp), at the MSRB's principal 
office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the MSRB included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The MSRB has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission has previously approved the establishment of the 
continuing disclosure service of EMMA, which will commence operation on 
July 1, 2009.\3\ The EMMA continuing disclosure service will receive 
electronic submissions of, and will make publicly available on the 
Internet through the EMMA web portal,\4\ continuing disclosure 
documents and related information from issuers, obligated persons and 
their agents pursuant to continuing disclosure undertakings entered 
into consistent with Exchange Act Rule 15c2-12. As approved, the EMMA 
continuing disclosure service will accept submissions of (i) continuing 
disclosure documents as described in Rule 15c2-12,\5\ and (ii) other 
disclosure documents specified in continuing disclosure undertakings 
but not specifically described in Rule 15c2-12.
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    \3\ See Securities Exchange Act Release No. 59061 (December 5, 
2008), 73 FR 75778 (December 12, 2008) (File No. SR-MSRB-2008-05) 
(approving the continuing disclosure service of EMMA with an 
effective date of July 1, 2009) (the ``EMMA continuing disclosure 
service approval''). The EMMA continuing disclosure service is 
designed to commence operation simultaneously with the effectiveness 
of certain amendments to Exchange Act Rule 15c2-12 adopted by the 
Commission. See Securities Exchange Act Release No. 59062 (December 
5, 2008), 73 FR 76104 (December 15, 2008) (adopting amendments to 
Exchange Act Rule 15c2-12). Approval of the proposed rule change on 
or prior to July 1, 2009 would allow the permanent EMMA continuing 
disclosure service to accept such voluntary disclosures upon 
commencement of operations.
    \4\ The EMMA web portal is accessible at http://emma.msrb.org.
    \5\ Such items consist of: (A) Annual financial information 
concerning obligated persons; (B) audited financial statements for 
obligated persons if available and if not included in the annual 
financial information; (C) notices of the following events, 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/sale of property securing 
repayment of the securities, and rating changes; and (D) notices of 
failures to provide annual financial information on or before the 
date specified in the continuing disclosure undertaking.
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    The proposed rule change would amend the EMMA continuing disclosure 
service to accept submissions of, and to make publicly available 
through the EMMA web portal, additional categories of continuing 
disclosure documents voluntarily submitted by issuers, obligated 
persons and their agents (``voluntary continuing disclosure 
document''). The proposed rule change would not establish an obligation 
upon any issuer or obligated person to make a submission of any 
voluntary continuing disclosure document. Voluntary continuing 
disclosure documents would be submitted, processed and disseminated in 
the same manner as provided with respect to disclosures made to the 
EMMA continuing disclosure service pursuant to continuing disclosure 
undertakings entered into consistent with Rule 15c2-12. In particular, 
such submissions would be accepted solely in electronic form as 
portable document format (PDF) files accompanied by appropriate 
indexing information.
    To facilitate organizing the submissions for easier access by the 
public, the proposed rule change would establish a number of additional 
categories in connection with voluntary continuing disclosure documents 
which the EMMA continuing disclosure service would accept and for which

[[Page 19613]]

specific indexing information is to be provided to EMMA during the 
submission process.\6\ These additional or voluntary categories would 
be applicable both to submissions pursuant to continuing disclosure 
undertakings of additional disclosure items beyond those items 
specified under Rule 15c2-12, as previously approved in the EMMA 
continuing disclosure service approval, and to continuing disclosures 
submitted voluntarily from time to time at the election of the issuer 
or obligated person pursuant to this proposed rule change (together 
categorized as ``Additional/Voluntary Disclosures''). The categories of 
Additional/Voluntary Disclosure would be as follows:
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    \6\ These categories reflect types of additional information 
that issuers or obligated persons have sometimes agreed to provide 
in their continuing disclosure undertakings beyond those items 
specified under Rule 15c2-12, as well as categories derived from 
sources such as existing investor relations websites of municipal 
issuers, recommended practices published by the Government Finance 
Officers Association, recommended best practices published by the 
National Federation of Municipal Analysts and suggestions from the 
MSRB's investor and issuer advisory groups and other industry 
participants.
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Other Financial/Operating Data Disclosures
     Quarterly/monthly financial information
     Change in fiscal year/timing of annual disclosure
     Change in accounting standard
     Interim/additional financial information/operating data
     Budget
     Investment/debt/financial policy
     Material provided to rating agency or credit/liquidity 
provider
     Consultant reports
     Other financial/operating data
Other Event-Based Disclosures
     Amendment to continuing disclosure undertaking
     Change in obligated person
     Notice to investors pursuant to bond documents
     Communication from the Internal Revenue Service
     Tender offer/secondary market purchases
     Bid for auction rate or other securities \7\
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    \7\ This would include, but not be limited to, any notice 
pursuant to the SEC no-action letter regarding municipal auction 
rate securities dated March 14, 2008, available at http://
www.sec.gov/divisions/corpfin/cf-noaction/2008/mars031408.pdf.
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     Capital or other financing plan
     Litigation/enforcement action
     Merger/consolidation/reorganization/insolvency/bankruptcy
     Change of trustee, tender agent, remarketing agent, or 
other on-going party
     Derivative or other similar transaction
     Other event-based disclosures
    With respect to the submission process through EMMA, the various 
categories of continuing disclosure would be organized to differentiate 
between categories of items specified under Rule 15c2-12 and 
Additional/Voluntary Disclosures.\8\ In most cases, submitters would be 
able to index a single submitted document into multiple applicable 
categories, including categories applicable to Rule 15c2-12 disclosures 
and to Additional/Voluntary Disclosures. Over time, the MSRB may 
combine two or more categories, may divide any category into two or 
more new categories or subcategories, or may form additional categories 
for purposes of indexing documents submitted in the ``other financial/
operating data'' or ``other event-based disclosures'' general category 
as appropriate based on the types of documents received.
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    \8\ EMMA would not differentiate between an Additional/Voluntary 
Disclosure made pursuant to a continuing disclosure undertaking and 
an Additional/Voluntary Disclosure made outside of a continuing 
disclosure undertaking, and all categories of Additional/Voluntary 
Disclosures would be available for either type of submission.
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    The categories of Additional/Voluntary Disclosures would be for the 
convenience of submitters and users of such documents and do not 
represent the MSRB's opinion as to the appropriate items of disclosure 
with respect to any specific municipal security. The availability of 
such categories would not imply or create an obligation to make any 
disclosures, and it would not be uncommon for one or many of the 
categories to be inapplicable to any particular security. Further, the 
nature of the specific documents submitted for a particular category 
may vary widely. Only those categories for which submissions have been 
made for a particular security would be displayed on the EMMA web 
portal page for such security.\9\
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    \9\ Thus, specific Rule 15c2-12 Disclosure and Additional/
Voluntary Disclosure category headings would not be displayed on the 
EMMA web portal for a security or issue if there is no disclosure 
document available from EMMA for such category.
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2. Statutory Basis
    The MSRB has adopted the proposed rule change pursuant to Section 
15B(b)(2)(C) of the Act,\10\ which provides that the MSRB's rules 
shall:
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    \10\ 15 U.S.C. 78o-4(b)(2)(C).

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 
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the public interest.

    The EMMA continuing disclosure service, as amended by the proposed 
rule change, would serve as an additional mechanism by which the MSRB 
works toward removing impediments to and helping to 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 inclusion of voluntary continuing 
disclosure documents in the EMMA continuing disclosure service would 
further help make information useful 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. Broad 
access to continuing disclosure documents through the EMMA continuing 
disclosure service 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. A single centralized and searchable venue for free public 
access to disclosure information should promote a more fair and 
efficient municipal securities market in which transactions are 
effected on the basis of material information available to all parties 
to such transactions, which should allow for fairer pricing of 
transactions based on a more complete understanding of the terms of the 
securities and the potential investment risks. Free access to this 
information--previously generally available, if at all, through paid 
subscription services or on a per-document fee basis--should reduce 
transaction costs for dealers and investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB does not believe that the proposed rule change would 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. Documents and information 
provided through the continuing disclosure service would be available 
to all persons simultaneously. In addition to making the documents and 
information available for free on the EMMA portal to all members of the 
public, the MSRB would make such documents and information available by 
subscription on an equal and non-

[[Page 19614]]

discriminatory basis without imposing restrictions on subscribers from, 
or imposing additional charges on subscribers for, re-disseminating 
such documents or otherwise offering value-added services and products 
based on such documents on terms determined by each subscriber. In 
particular, the MSRB believes that the proposed rule change will make 
most voluntary continuing disclosure documents available for the first 
time to a broader group of private information services and, therefore, 
would promote, rather than hinder, further competition, growth and 
innovation in this area. The MSRB believes that the benefits realized 
by the investing public from the broader and easier availability of 
disclosure information about municipal securities that would be 
provided through the EMMA continuing disclosure service would justify 
any potentially negative impact on existing enterprises from the 
operation of EMMA.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received on the 
proposed rule change. However, in a notice published by the MSRB on 
January 31, 2008, the MSRB described and sought comment on its plan for 
implementing a continuing disclosure service that would be integrated 
into other services to be offered through EMMA (the ``2008 
Notice'').\11\ In particular, the MSRB stated its plan to institute the 
continuing disclosure service to accept submissions of continuing 
disclosure documents pursuant to continuing disclosure undertakings 
consistent with Rule 15c2-12. In addition to making continuing 
disclosures available at no cost through the EMMA portal, the MSRB 
would make such disclosures available through a paid real-time data 
stream subscription for re-dissemination or other use by subscribers. 
One commentator asked whether periodic filings other than submissions 
of annual financial information, such as quarterly or monthly financial 
results, would be accepted.\12\ Another commentator stated that it 
strongly believed that EMMA should be capable of housing all disclosure 
documents, extending beyond those specifically required by Rule 15c2-
12, and could only support a system that allows access to other 
pertinent information.\13\ The MSRB supports the dissemination of 
additional continuing disclosures beyond the baseline established by 
Rule 15c2-12 and is providing for such submission and dissemination in 
this filing.
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    \11\ See MSRB Notice 2008-05 (January 31, 2008). The comments 
received on this notice are discussed in SR-MSRB-2008-05 (July 29, 
2008). See also Securities Exchange Act Release No. 58256 (July 30, 
2008) 73 FR 46161 (August 7, 2008) (File No. SR-MSRB-2008-05) 
(proposing the establishment of the continuing disclosure service of 
EMMA). Comments relating to voluntary filings of continuing 
disclosure documents not contemplated under Exchange Act Rule 15c2-
12 are discussed herein.
    \12\ See letter from Robert Donovan and Stephen M. Fillebrown, 
National Association of Health and Education Facilities Finance 
Authorities, to Ernesto A. Lanza, Senior Associate General Counsel, 
MSRB, dated March 3, 2008.
    \13\ See letter from\\ Rob Yolland, Chairman, National 
Federation of Municipal Analysts, to Mr. Lanza, dated March 10, 
2008.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2009-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2009-04. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the MSRB. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2009-04 and should be 
submitted on or before May 20, 2009.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-9819 Filed 4-28-09; 8:45 am]

BILLING CODE 8010-01-P
