
[Federal Register: August 25, 2010 (Volume 75, Number 164)]
[Notices]               
[Page 52383-52384]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25au10-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62742, File No. SR-MSRB-2010-05]

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

August 19, 2010.
    On June 30, 2010, the Municipal Securities Rulemaking Board 
(``MSRB''), filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to the continuing 
disclosure service of the MSRB Electronic Municipal Market Access 
(EMMA) System. The proposed rule change was published for comment in 
the Federal Register on July 19, 2010.\3\ The Commission received one 
comment letter.\4\ This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 62489 (July 13, 
2010), 75 FR 41909 (July 19, 2010) (``Commission's Notice'').
    \4\ See letter from Steve Apfelbacher, President, National 
Association of Independent Public Finance Advisors (``NAIPFA''), 
dated August 9, 2010.
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    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''); \5\ 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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    \5\ 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

[[Page 52384]]

submission of continuing disclosures to the MSRB (the ``Rule 15c2-12 
Amendment'').\6\ 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; \7\ (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; 
\8\ and (5) adds new Rule 15c2-12 Event Notices.\9\
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    \6\ See Release No. 34-62184A; File No. S7-15-09 (May 26, 2010).
    \7\ 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.
    \8\ 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.
    \9\ 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.\10\
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    \10\ 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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    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. A full description of the proposal is contained in 
the Commission's Notice.
    The Commission received one comment letter supporting the 
proposal.\11\ NAIPFA does not believe the proposed rule change to allow 
the MSRB to modify EMMA to accommodate the Rule 15c2-12 Amendment will 
impose any undue burden on issuers. In addition, NAIPFA agrees that the 
proposed changes are consistent with the Exchange Act and will 
effectuate the Commission's recent Rule 15c2-12 Amendment.
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    \11\ See supra note 4.
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    The Commission has carefully considered the proposed rule change 
and finds that the proposed rule change is consistent with the 
requirements of the Exchange Act and the rules and regulations 
thereunder applicable to the MSRB \12\ and, in particular, the 
requirements of Section 15B(b)(2)(C) of the Exchange Act \13\ and the 
rules and regulations thereunder. Section 15B(b)(2)(C) of the Exchange 
Act requires, among other things, that the MSRB's rules 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 the public interest.\14\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the Exchange Act because it effectuates the 
Commission's Rule 15c2-12 Amendment under the Exchange 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.
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    \12\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78o-4(b)(2)(C).
    \14\ Id.
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    The proposed rule change will become effective on the date 
requested by the MSRB.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\15\ that the proposed rule change (SR-MSRB-2010-05), be, 
and it hereby is, approved.
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    \15\ 15 U.S.C. 78s(b)(2).

    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. 2010-21082 Filed 8-24-10; 8:45 am]
BILLING CODE 8010-01-P

