
[Federal Register: July 19, 2010 (Volume 75, Number 137)]
[Notices]               
[Page 41909-41911]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19jy10-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62489; File No. SR-MSRB-2010-05]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to the 
Continuing Disclosure Service of the MSRB Electronic Municipal Market 
Access (EMMA) System

July 13, 2010.
    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 June 30, 2010, 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 continuing disclosure service of its Electronic Municipal 
Market Access (``EMMA'') system to reflect recent Commission amendments 
to Securities Exchange Act Rule 15c2-12 (``Exchange Act Rule 15c2-
12''). The MSRB requests 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 December 1, 2010 and shall 
be announced no later than five (5) business days prior to the 
effective date.
    The text of the proposed rule change is available on the MSRB's Web 
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings.aspx, 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. The 
text of these statements may be examined at the places specified in 
Item IV below. The MSRB has prepared summaries, set

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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
    Currently Exchange Act Rule 15c2-12 provides that an underwriter 
for a primary offering of municipal securities subject to Exchange Act 
Rule 15c2-12 is prohibited from underwriting the offering unless the 
underwriter has determined that the issuer or an obligated person for 
whom financial information or operating data is presented in the final 
official statement has undertaken in writing to provide certain items 
of information to the MSRB. Such items include: (A) Annual financial 
information; (B) audited financial statements if available and if not 
included in the annual financial information; (C) notices of certain 
events (``Rule 15c2-12 Event Notices''); \3\ and (D) notices of 
failures to provide annual financial information on or before the date 
specified in the written undertaking. Written undertakings are to 
provide that all continuing disclosure documents submitted to the MSRB 
shall be accompanied by identifying information as prescribed by the 
MSRB. Such submissions are made by issuers, obligated persons and their 
agents to the MSRB through the EMMA continuing disclosure service and 
are made available to the public through the EMMA Web site for free and 
through paid subscriptions.
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    \3\ Under Exchange Act Rule 15c2-12(b)(5)(i)(C), notices of the 
following events currently are required to be submitted to the MSRB, 
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, or sale of property securing 
repayment of the securities; and rating changes.
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    The Commission has recently amended Exchange Act Rule 15c2-12 to 
modify several provisions relating to the submission of continuing 
disclosures to the MSRB (the ``Rule 15c2-12 Amendment'').\4\ The Rule 
15c2-12 Amendment, among other things: (1) Removes the exemption from 
the continuing disclosure provisions of Exchange Act Rule 15c2-12 for 
demand securities; \5\ (2) modifies Exchange Act Rule 15c2-12 to 
establish a timeliness standard for submission of Rule 15c2-12 Event 
Notices of ten business days after the occurrence of the event; (3) 
deletes the general materiality condition for certain of the Rule 15c2-
12 Event Notices; (4) modifies the language of the Rule 15c2-12 Event 
Notice regarding adverse tax events; \6\ and (5) adds new Rule 15c2-12 
Event Notices.\7\
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    \4\ See Release No. 34-62184A; File No. S7-15-09 (May 26, 2010).
    \5\ Currently primary offerings for demand securities as 
described in Exchange Act Rule 15c2-12(d)(1)(iii) are exempt from 
the requirements of Exchange Act Rule 15c2-12.
    \6\ The Rule 15c2-12 Amendment expands the current language of 
such Rule 15c2-12 Event Notice category to include adverse tax 
opinions, the issuance by the IRS of proposed or final 
determinations of taxability, Notices of Proposed Issue (IRS Form 
5701-TEB) or other material notices or determinations with respect 
to the tax status of the security or other material events affecting 
the tax status of the security.
    \7\ The Rule 15c2-12 Amendment includes the following new Rule 
15c2-12 Event Notices: tender offers; bankruptcy, insolvency, 
receivership, or similar event of the issuer or 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, the entry into a definitive agreement 
to undertake such an action or the termination of a definitive 
agreement relating to any such actions, other than pursuant to its 
terms, if material; and the appointment of a successor or additional 
trustee, or the change of name of a trustee, if material.
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    To permit issuers and obligated persons to meet the provisions of 
the Rule 15c2-12 Amendment on or prior to the compliance date of 
December 1, 2010 established under the Rule 15c2-12 Amendment, this 
proposed rule change would modify the language of the EMMA continuing 
disclosure service to reflect the materiality standard changes under 
the Rule 15c2-12 Amendment and would modify the list of voluntary 
event-based disclosures that may be submitted to the EMMA continuing 
disclosure service to reflect changes in the list of Rule 15c2-12 Event 
Notices made by the Rule 15c2-12 Amendment.\8\
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    \8\ The existing language of the EMMA continuing disclosure 
service would incorporate the changed list of Rule 15c2-12 Event 
Notices made by the Rule 15c2-12 Amendment by reference to the then-
current provisions of Exchange Act Rule 15c2-12 and therefore no 
change in the language of the EMMA continuing disclosure service 
would be made. In addition, the removal of the exemption for demand 
securities from the continuing disclosure provisions of Exchange Act 
Rule 15c2-12 does not require changes to the EMMA continuing 
disclosure service in order to permit submission of disclosures in 
connection with demand securities.
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    Upon this proposed rule change becoming effective, the continuing 
disclosure service of EMMA would accept submissions of, and make 
publicly available through EMMA, the following categories of event-
based continuing disclosure documents: \9\
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    \9\ This proposed rule change does not modify the existing 
categories of financial/operating data disclosures available through 
the EMMA continuing disclosure service.
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Rule 15c2-12 Event Notices
     Principal and interest payment delinquencies.
     Non-payment related defaults, if material.
     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, IRS notices or events affecting the 
tax status of the security.\10\
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    \10\ This category would represent the expansion in the 15c2-12 
Amendment of the prior category of ``adverse tax opinions or events 
affecting the tax-exempt status of the security'' to ``adverse tax 
opinions, the issuance by the Internal Revenue Service of proposed 
or final determinations of taxability, Notices of Proposed Issue 
(IRS Form 5701-TEB) or other material notices or determinations with 
respect to the tax status of the security, or other material events 
affecting the tax status of the security.'' See amended Exchange Act 
Rule 15c2-12(b)(5)(i)(C)(6).
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     Modifications to rights of security holders, if material.
     Bond calls, if material.\11\
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    \11\ The Rule 15c2-12 Amendment expands this category to include 
tender offers. See amended Exchange Act Rule 15c2-12(b)(5)(i)(C)(8). 
The EMMA continuing disclosure service currently provides a 
voluntary event-based notice category of ``tender offers/secondary 
market purchases.'' The EMMA continuing disclosure service will 
continue to utilize ``bond call'' as a separate category from 
``tender offer.''
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     Defeasances.
     Release, substitution or sale of property securing 
repayment of the securities, if material.
     Rating changes.
     Tender offers.\12\
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    \12\ Id. The existing ``tender offers/secondary market 
purchases'' category of voluntary event-based notice will be split 
into a new Rule 15c2-12 Event Notice category of ``tender offers'' 
and a voluntary event-based category of ``secondary market 
purchases.''
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     Bankruptcy, insolvency, receivership or similar event of 
the obligated person \13\.
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    \13\ The existing ``merger/consolidation/reorganization/
insolvency/bankruptcy'' category of voluntary event-based notice 
will be split into a new Rule 15c2-12 Event Notice category of 
``bankruptcy, insolvency, receivership or similar event of the 
issuer or obligated person'' and a second Rule 15c2-12 Event Notice 
category of ``merger, consolidation or acquisition of the obligated 
person.'' See amended Exchange Act Rule 15c2-12(b)(5)(i)(C)(12).
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     Merger, consolidation, or acquisition of the obligated 
person, if material \14\.
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    \14\ Id. The full reference to this category under amended 
Exchange Act Rule 15c2-12(b)(5)(i)(C)(13) is ``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, the 
entry into a definitive agreement to undertake such an action or the 
termination of a definitive agreement relating to any such actions, 
other than pursuant to its terms, if material.''

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[[Page 41911]]

     Appointment of a successor or additional trustee, or the 
change of name of a trustee, if material.
    Additional/Voluntary Event-Based Disclosures (certain 
communications from the Internal Revenue Service, tender offers, 
merger/consolidation/reorganization/insolvency/bankruptcy and change of 
trustee are no longer reflected as additional/voluntary event-based 
disclosures).
     Amendment to continuing disclosure undertaking.
     Change in obligated person.
     Notice to investors pursuant to bond documents.
     Certain communications from the Internal Revenue Service.
     Secondary market purchases.
     Bid for auction rate or other securities.
     Capital or other financing plan.
     Litigation/enforcement action .
     Change of tender agent, remarketing agent, or other on-
going party.
     Derivative or other similar transaction.
     Other event-based disclosures.
2. Statutory Basis
    The MSRB has adopted the proposed rule change pursuant to section 
15B(b)(2)(C) of the Act,\15\ which provides that the MSRB's rules 
shall:
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    \15\ 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 effectuates the Commission's Rule 15c2-12 Amendment 
under the Act. In addition, the proposed rule change serves to remove 
impediments to and help 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 
proposed rule change would aid in providing additional information 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 without barriers to obtaining such information. 
Broad access to additional continuing disclosure documents through the 
continuing disclosure service of EMMA 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.

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

    The MSRB does not believe the proposed rule change will 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 additional 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-discriminatory basis.

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.

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 December 1, 2010 
and shall be announced no later than five (5) business 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-2010-05 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-2010-05. 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 Web site viewing and 
printing 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-2010-05 and should be 
submitted on or before August 9, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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 Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-17492 Filed 7-16-10; 8:45 am]
BILLING CODE 8010-01-P

