
[Federal Register: July 22, 2009 (Volume 74, Number 139)]
[Notices]               
[Page 36294-36298]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jy09-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60315; File No. SR-MSRB-2009-10]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to Additional 
Voluntary Submissions by Issuers to the MSRB's Electronic Municipal 
Market Access System (EMMA[supreg])

July 15, 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 July 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 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 primary market and continuing disclosure services of the 
Electronic Municipal Market Access system (``EMMA'') to permit issuers 
and their designated agents to submit preliminary official statements 
and other related pre-sale documents, official statements and advance 
refunding documents, as well as information relating to the preparation 
and submission of audited financial statements and annual financial 
information and links to other disclosure information. The MSRB has 
requested an effective date for the proposed rule change of a date to 
be announced by the MSRB in a notice published on the MSRB Web site, 
which date shall be no later than nine months after Commission approval 
of the proposed rule change and shall be

[[Page 36295]]

announced no later than sixty (60) days prior to the effective date.
    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 proposed rule change consists of amendments to the EMMA primary 
market disclosure service to permit issuers and their designated agents 
to make voluntary submissions to the primary market disclosure service 
of official statements, preliminary official statements and related 
pre-sale documents, and advance refunding documents (collectively, 
``primary market documents'').\3\ Pre-sale documents other than a 
preliminary official statement (including but not limited to notices of 
sale or supplemental disclosures) would be accepted only if accompanied 
or preceded by the preliminary official statement.\4\ An issuer seeking 
to make submissions of primary market documents to the EMMA primary 
market disclosure service would use the same accounts established with 
respect to submissions of continuing disclosure documents to the EMMA 
continuing disclosure service, subject to additional verification 
procedures to affirmatively establish the account holder's authority to 
act on behalf of the issuer in connection with such primary market 
disclosure submissions.
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    \3\ \\ Obligated persons would be permitted to submit primary 
market documents through the EMMA primary market disclosure service 
only if designated as an agent by the issuer.
    \4\ The MSRB believes that posting of such pre-sale documents 
without the related disclosure information provided in a preliminary 
official statement would be inconsistent with the core disclosure 
purposes of EMMA.
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    Submissions of primary market documents by issuers and their 
designated agents will be accepted on a voluntary basis if, at the time 
of submission, they are accompanied by information necessary to 
accurately identify: (i) The category of document being submitted; (ii) 
the issues or specific securities to which such document is related; 
and (iii) in the case of an advance refunding document, the specific 
securities being refunded pursuant thereto. The primary market 
documents and related indexing information would be displayed on the 
EMMA Web portal and also would be included in EMMA's primary market 
disclosure subscription service.
    The proposed rule change also would amend the EMMA continuing 
disclosure service to permit issuers, obligated persons and their 
agents to make voluntary submissions to the continuing disclosure 
service of additional categories of disclosures, as well as information 
about their continuing disclosure undertakings. Such additional 
continuing disclosures and related indexing information would be 
displayed on the EMMA Web portal and also would be included in EMMA's 
continuing disclosure subscription service. Such additional items are:
     Issuer's or obligated person's undertaking to prepare 
audited financial statements pursuant to generally accepted accounting 
principles (``GAAP'') as established by the Governmental Accounting 
Standards Board (``GASB''), as described below (the ``GASB-GAAP 
undertaking'');
     Issuer's or obligated persons' undertaking to submit 
annual financial information to EMMA within 120 calendar days after the 
end of the fiscal year, as described below (the ``annual filing 
undertaking'');
     Certificate of Achievement for Excellence in Financial 
Reporting awarded by the Government Finance Officers Association 
(``GFOA'') in connection with the preparation of a Comprehensive Annual 
Financial Report (``CAFR'') of an issuer (``GFOA-CAFR Certificate''); 
\5\ and
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    \5\ The GFOA-CAFR Certificate is widely viewed as indicative of 
positive achievement in financial reporting by state and local 
governments. The MSRB would consider adding in the future additional 
voluntary disclosures of other widely accepted, merit-based and 
independently bestowed distinctions with respect to financial or 
other disclosures by issuers or obligated persons.
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     Uniform resource locator (URL) of the issuer's or 
obligated person's Internet-based investor relations or other 
repository of financial/operating information.
    The GASB-GAAP undertaking would consist of a voluntary undertaking 
by an issuer or obligated person (in the case of an obligated person 
that is a state or local governmental entity), either at the time of a 
primary offering or at any time thereafter, that the issuer or 
obligated person will prepare its audited financial statements in 
accordance with GAAP as established by GASB. The GASB-GAAP undertaking 
would assist investors and other market participants in understanding 
how audited financial statements were prepared. The fact that an issuer 
or obligated person has entered into a GASB-GAAP undertaking would be 
prominently disclosed on the EMMA Web portal as a distinctive 
characteristic of the securities to which such undertaking applies. If 
an issuer or obligated person that has made a GASB-GAAP undertaking 
later rescinds such undertaking, the issuer or obligated persons would 
be able to disclose such action through EMMA. The MSRB would not 
confirm the accuracy of any GASB-GAAP undertaking and would not review 
or confirm the conformity of submitted audited financial statements to 
GASB-GAAP.
    The annual filing undertaking would consist of a voluntary 
undertaking by an issuer or obligated person, either at the time of a 
primary offering or at any time thereafter, that the issuer or 
obligated person, as appropriate, will submit to EMMA its annual 
financial information as contemplated under Rule 15c2-12 of the Act by 
no later than 120 calendar days after the end of such issuer's or 
obligated person's fiscal year.\6\ The annual filing undertaking would 
assist investors and other market participants in understanding when 
the annual financial information is expected to be available in the 
future. The fact that an issuer or obligated person has entered into an 
annual filing undertaking would be prominently disclosed on the EMMA 
Web portal as a distinctive characteristic of the securities to which 
such undertaking applies. If an issuer or obligated person that has 
made an annual filing undertaking later rescinds such undertaking, the 
issuer or obligated person would be able to disclose such action 
through EMMA.

[[Page 36296]]

The MSRB would not review or confirm the compliance of an issuer or 
obligated person with its annual filing undertaking.
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    \6\ \\ Under the Act, smaller public reporting companies, as 
non-accelerated filers, generally are required to file their annual 
reports on Form 10-K with the Commission within 90 days after the 
end of their fiscal year. The longer 120-day period included in the 
voluntary annual filing undertaking of the proposed rule change is 
designed to accommodate additional steps that state and local 
governments often must take--under state law, pursuant to their own 
requirements, or otherwise--in completing the work necessary to 
prepare their annual financial information as contemplated under 
Exchange Act Rule 15c2-12.
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    The GFOA awards the GFOA-CAFR Certificate to a government if, based 
on a review process, its CAFR substantially complies with both GAAP and 
GFOA's CAFR program policy. According to current GFOA eligibility 
requirements, financial reports must include all funds and component 
units of the governmental entity, in accordance with GAAP, in order to 
be considered a CAFR. The GFOA-CAFR Certificate would assist investors 
and other market participants in assessments of information provided in 
an issuer's CAFR. If an issuer submits a copy of the GFOA-CAFR 
Certificate to EMMA, the EMMA Web portal would prominently disclose the 
issuer's receipt of a GFOA-CAFR Certificate as a distinctive 
characteristic of the applicable securities. The MSRB would not confirm 
the validity of a GFOA-CAFR Certificate submitted to EMMA.
    Finally, a URL of an issuer's or obligated person's Internet-based 
investor relations or other repository of financial/operating 
information would provide investors with an additional avenue for 
obtaining further financial, operating or other investment-related 
information about such issuer or obligated person.
    The GASB-GAAP undertaking and annual filing undertaking could be 
included within the continuing disclosure undertaking entered into 
consistent with Exchange Act Rule 15c2-12 or could be made in a 
separate agreement. Issuers and obligated persons would indicate the 
existence of such an undertaking through a data input election on EMMA. 
The URL of an issuer's or obligated person's investor relations or 
other repository of financial/operating information also could be 
entered through a text/data input field on EMMA. No document would be 
required to be submitted to EMMA in connection with the GASB-GAAP 
undertaking and annual filing undertaking or the issuer/obligated 
person URL. The MSRB would include an explanation of the GASB-GAAP 
undertaking, annual filing undertaking and GFOA-CAFR Certificate on the 
EMMA Web portal.
2. Statutory Basis
    The MSRB has adopted the proposed rule change pursuant to Section 
15B(b)(2)(C) of the Act,\7\ which provides that the MSRB's rules shall:
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    \7\ 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 MSRB believes that the proposed rule change is consistent with 
the Act in that it serves to remove impediments to and helps 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. Voluntary dissemination of 
preliminary official statements through EMMA, particularly if made 
available prior to the sale of a primary offering to the underwriters, 
would provide timely access by investors and other market participants 
to key information useful in making an investment decision in a manner 
that is consistent with the MSRB's statutory authority. The GFOA-CAFR 
Certificate would assist investors and other market participants in 
assessments of information provided in an issuer's CAFR, while the 
GASB-GAAP undertaking would assist understanding of how such 
information was prepared and the annual filing undertaking would assist 
understanding of when such information is expected to be available in 
the future. A URL provided by an issuer or obligated person would 
provide investors with an additional avenue for obtaining further 
financial, operating or other investment-related information about such 
issuer or obligated person.

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

    The MSRB does not believe the proposed rule change would impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. The additional items of information submitted 
by issuers and obligated persons to the EMMA system for public 
dissemination would be available to all persons simultaneously. In 
addition to making such information available for free on the EMMA Web 
portal to all members of the public, the MSRB would make such documents 
and information available by subscription on an equal and non-
discriminatory basis. Further, the proposed rule change would apply 
equally to all issuers and obligated persons.
    The MSRB does not believe that making the additional items of 
information to be included in the EMMA continuing disclosure service 
available to the public would compete with other information providers 
and, to the extent other information providers were to seek to make 
such information available to the public, such providers could obtain 
the information from the MSRB through the subscription service on an 
equal and non-discriminatory basis. Further, the MSRB does not believe 
that allowing issuers to submit documents to the EMMA primary market 
disclosure service would create a burden on or compete inappropriately 
with any other information providers to which such documents may also 
be provided and notes that other information providers would be able to 
obtain the information from the MSRB through the subscription service 
on an equal and non-discriminatory basis.
    The proposed rule change also would not impose any additional 
burdens on competition among issuers of municipal securities since the 
voluntary submissions provided for under the proposed rule change may 
be made by any issuer on an equal and non-discriminatory basis. Issuers 
are not required to be members of the GFOA in order to be eligible for 
the GFOA-CAFR Certificate. Although a fee is assessed for the necessary 
review by the GFOA to qualify for the GFOA-CAFR Certificate, the GFOA 
has established a sliding fee scale based on revenues that it views as 
addressing affordability for small issuers. Some issuers may choose not 
to apply for the GFOA-CAFR Certificate based on the fees assessed or 
other considerations. However, the proposed rule change would provide 
for disclosure of the additional voluntary items if an issuer elects to 
make such disclosures.

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. Therefore, no comments were received with regard 
to the proposed additional items of disclosure under the EMMA 
continuing disclosure service. However, several commentators provided 
comments to the MSRB with respect to the submission of preliminary 
official statements to EMMA in response to a series of notices 
published by the MSRB seeking comment on the establishment of EMMA for 
purposes of official statement dissemination.\8\
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    \8\ MSRB Notice 2006-19 (July 27, 2006) (the ``Concept 
Release''); MSRB Notice 2007-5 (January 25, 2007) (the ``January 
2007 Notice''). Comments relating to preliminary official statement 
submissions were received in response to the Concept Release from 
American Government Financial Services Company (``AGFS''), TRB 
Associates (``TRB''), UMB Bank, N.A. (``UMB''), and Zions Bank 
Public Finance (``Zions''). Comments relating to preliminary 
official statement submissions were received in response to the 
January 2007 Notice from American Municipal Securities, Inc. 
(``AMS''), DPC DATA Inc. (``DPC''), Ipreo Holdings LLC (``Ipreo''), 
National Association of Bond Lawyers (``NABL''), and Securities 
Industry and Financial Markets Association (``SIFMA'').

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[[Page 36297]]

    SIFMA,\9\ along with AMS, DPC, Ipreo, NABL, TRB, UMB and Zions, 
supported the concept of voluntary submissions of preliminary official 
statements. DPC and AGFS suggested that the MSRB explore making the 
submission of preliminary official statements mandatory, while SIFMA, 
AMS and NABL emphasized that preliminary official statement submissions 
should not be made mandatory. The MSRB believes that there is 
considerable value in providing a means for centralized access to 
preliminary official statements at or prior to the time of trade and in 
sufficient time to make use of the information in coming to an 
investment decision. However, the MSRB is precluded from mandating pre-
sale submission of preliminary official statements pursuant to Section 
15B(d)(1) of the Act. In its filing with the Commission to establish 
the EMMA primary market disclosure service, the MSRB stated that it 
expected to provide the opportunity for voluntary submissions of and 
access to preliminary official statements through EMMA, consistent with 
the MSRB's statutory authority, pursuant to a future filing with the 
Commission.\10\ The proposed rule change would permit such voluntary 
submissions of preliminary official statements.
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    \9\ Bear Stearns & Co., Inc. and Griffin, Kubik, Stephens & 
Thompson, Inc. stated that they participated in the formulation of 
SIFMA's comments on the January 2007 Notice and fully supported 
SIFMA's positions.
    \10\ See Securities Exchange Act Release No. 59636 (March 27, 
2009), 74 FR 15190 (April 2, 2009) (File No. SR-MSRB-2009-02).
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    SIFMA and DPC noted the importance of ensuring version control 
where both preliminary official statements and official statements are 
made available (as well as in handling ``stickers'' to official 
statements), suggesting that the MSRB include a mechanism for 
notification to the public when the final official statement is posted 
in cases where a preliminary official statement has previously been 
submitted. DPC suggested that preliminary official statements be 
deleted when final official statements are submitted, while NABL 
suggested that underwriters be permitted to request that the 
preliminary official statement be removed from the centralized 
electronic system once the ``timeliness of a POS has ended,'' noting 
that its continued availability may confuse investors. However, SIFMA 
opposed the removal of the preliminary official statement.
    The MSRB notes that the current operation of the EMMA Web portal 
provides processes that address each of these suggestions. Under 
current Rule G-32, preliminary official statements, if available, are 
required to be submitted by the underwriter by closing solely in the 
circumstance where an official statement is not being prepared by the 
issuer or if the official statement is not available for submission to 
EMMA by the closing. Once the official statement is provided by the 
underwriter, the preliminary official statement generally is moved to a 
document archive that is accessible through the EMMA portal directly 
from the page where the link to the official statement is provided, 
thereby distinguishing the final official statement from the 
preliminary official statement while maintaining public access for 
those wishing to refer back to the preliminary official statement. 
Users of the EMMA portal are able to request to receive e-mail 
notifications for updates to the disclosure document for a specific 
security, which applies to the situation where an official statement is 
submitted to EMMA following an initial submission of the preliminary 
official statement.

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.
    The MSRB has requested an effective date for the proposed rule 
change of a date to be announced by the MSRB in a notice published on 
the MSRB Web site, which date shall be no later than nine months after 
Commission approval of the proposed rule change and shall be announced 
no later than sixty (60) days prior to the effective date.

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-2009-10 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-2009-10. 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-2009-10 and should be 
submitted on or before August 12, 2009.


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-17354 Filed 7-21-09; 8:45 am]

BILLING CODE 8010-01-P
