I 

114TH CONGRESS 

2D SESSION H. R. 6488 

To amend the Securities Act of 1933 and the Securities Exchange Act 

of 1934 to remove the exemption from registration for certain private 

activity bonds, to authorize the Securities and Exchange Commission 

to require the preparation of periodic reports by issuers of municipal 

securities, to authorize the Securities and Exchange Commission to establish baseline mandatory disclosure in primary offerings of such securities, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 8, 2016 

Ms. MOORE introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL 

To amend the Securities Act of 1933 and the Securities 

Exchange Act of 1934 to remove the exemption from 

registration for certain private activity bonds, to authorize the Securities and Exchange Commission to require 

the preparation of periodic reports by issuers of municipal securities, to authorize the Securities and Exchange 

Commission to establish baseline mandatory disclosure 

in primary offerings of such securities, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Municipal Securities 

3 Disclosure Act of 2016’’. 

4 SEC. 2. CERTAIN PRIVATE ACTIVITY BONDS SUBJECT TO 

5 REGISTRATION. 

6 Section 3(a)(2) of the Securities Act of 1933 (15 

7 U.S.C. 77c(a)(2)) is amended by striking ‘‘or any security 

8 which is an industrial development bond’’ and all that fol9 lows through ‘‘section 103(c) does not apply to such secu10 rity;’’. 

11 SEC. 3. MUNICIPAL SECURITIES DISCLOSURE. 

12 (a) IN GENERAL.—Section 15B of the Securities Ex13 change Act of 1934 (15 U.S.C. 78o–4) is amended— 

14 (1) in subsection (e)(8), by inserting after ‘‘mu15 nicipal corporate instrumentality of a State’’ the fol16 lowing: ‘‘or of a political subdivision of a State’’; and 

17 (2) by adding at the end the following: 

18 ‘‘(f) MUNICIPAL SECURITIES DISCLOSURE.— 

19 ‘‘(1) PERIODIC REPORTS AND REPORTS OF CER20 TAIN ENUMERATED EVENTS.— 

21 ‘‘(A) IN GENERAL.—Any issuer of, or obli22 gated person with respect to, municipal securi23 ties which has outstanding during any portion 

24 of a fiscal year an aggregate principal amount 

25 of municipal securities exceeding such sums as 

26 determined by the Commission shall prepare 


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1 annual periodic reports and, in a timely man2 ner, reports of certain enumerated events, as 

3 defined by rule or regulation of the Commis4 sion, in such form and in such time periods as 

5 the Commission may prescribe as being nec6 essary or appropriate in the public interest or 

7 for the protection of investors. 

8 ‘‘(B) DEADLINE.—The Commission shall 

9 determine the deadline for when a periodic re10 port described under subparagraph (A) shall be 

11 prepared. 

12 ‘‘(C) AUTHORITY TO SCALE REQUIRE13 MENTS.—In issuing rules to carry out subpara14 graphs (A) and (B), the Commission may set 

15 different requirements for different classes of 

16 issuers or other obligated persons, including for 

17 issuers or other obligated persons of different 

18 sizes, as appropriate. 

19 ‘‘(2) OFFICIAL STATEMENTS FOR PRIMARY OF20 FERINGS.— 

21 ‘‘(A) IN GENERAL.—It shall be unlawful 

22 for any issuer of, or obligated person with re23 spect to, municipal securities that offers or sells 

24 an issue of municipal securities in a public of25 fering, the aggregate principal amount of which 


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1 exceeds an amount to be determined by the 

2 Commission, to make use of the mails or any 

3 means or instrumentality of interstate com4 merce to effect any transaction in, or to induce 

5 or attempt to induce the purchase or sale of, 

6 any municipal security unless such issuer or 

7 other obligated person, prior to the offer or 

8 sale, prepares and disseminates an official 

9 statement in accordance with such rules and 

10 regulations as the Commission may prescribe as 

11 being necessary or appropriate in the public in12 terest or for the protection of investors. 

13 ‘‘(B) CONTENTS.—The official statement 

14 described in subparagraph (A) shall contain 

15 such information as the Commission may, in its 

16 discretion, by rule or regulation prescribe, in17 cluding— 

18 ‘‘(i) an identification and description 

19 of the issuer of, or any other obligated per20 son with respect to, the securities being of21 fered; 

22 ‘‘(ii) a description of any legal limita23 tion on the incurrence of indebtedness by 

24 the issuer, other obligated person, or the 

25 taxing authority of the issuer; 


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1 ‘‘(iii) a description of the issuer’s or 

2 other obligated person’s debt structure, in3 cluding information with respect to 

4 amounts of authorized and outstanding 

5 debt, estimated amount of short-term debt, 

6 character of amortization provisions of 

7 debt, sinking fund requirements, security 

8 for debt, nature and extent of guaranteed 

9 debt, and debt service requirements; 

10 ‘‘(iv) a description of the nature and 

11 extent of other material contingent liabil12 ities or commitments of the issuer or other 

13 obligated person that could affect timely 

14 repayment of the subject debt, including 

15 any loans or alternative financings; 

16 ‘‘(v) if any payment of principal or in17 terest on any security of the issuer or any 

18 predecessor thereof has been defaulted on, 

19 or has been postponed or delayed, during 

20 the 10 years preceding the date of the offi21 cial statement, a description of the date, 

22 amounts, and circumstances of such de23 fault, postponement, or delay and of the 

24 terms of any succeeding arrangements 

25 thereof; 


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1 ‘‘(vi) if the securities are supported by 

2 taxes (including special assessments or 

3 payments in lieu of taxes)— 

4 ‘‘(I) a description of the issuer’s 

5 or other obligated person’s tax author6 ity and structure relating to the spe7 cific tax or taxes that serve as secu8 rity for the debt over the 5 years pre9 ceding the date of the official state10 ment, including the nature of taxes 

11 levied, tax rates, real and personal 

12 property valuation and assessment 

13 procedures, amounts of property valu14 ations and assessments, amounts of 

15 tax levies, amounts of tax collections, 

16 and delinquent tax procedures and ex17 perience; 

18 ‘‘(II) if the applicable taxes have 

19 not been levied as of the date of the 

20 official statement, an estimate of the 

21 future tax revenues during the term 

22 of the securities, including the basis 

23 for such estimate; and 

24 ‘‘(III) a description of the 

25 issuer’s or other obligated person’s 


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1 major taxpayers relating to the spe2 cific tax or taxes that serve as secu3 rity for the debt; 

4 ‘‘(vii) if material to the type of debt 

5 being offered, the financial statements of 

6 the issuer or other obligated person— 

7 ‘‘(I) in such detail and form, and 

8 for such periods beginning not earlier 

9 than the 5th fiscal year of the issuer 

10 or other obligated person ending be11 fore the date of the official statement, 

12 as the Commission may prescribe; and 

13 ‘‘(II) for any fiscal year begin14 ning on or after December 31, 2015, 

15 that are audited and reported on by 

16 an independent public, or certified ac17 countant or examiner from an inde18 pendent State agency authorized by 

19 law to perform such functions, in such 

20 manner as the Commission may pre21 scribe; 

22 ‘‘(viii) a description of the offering, 

23 including amount to be offered, price, plan 

24 of distribution, and underwriting arrange25 ments and compensation; 


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1 ‘‘(ix) a description of the securities to 

2 be offered, including whether the securities 

3 are secured by collateral or property, or 

4 other credit enhancements, events of de5 fault, payment of principal and interest, 

6 sinking fund, redemption, debt reserve 

7 funds, priority, and rights of security hold8 ers to bring suit against the issuer or other 

9 obligated person; 

10 ‘‘(x) a description of any project or 

11 enterprise of the issuer or other obligated 

12 person to be financed from the proceeds of 

13 the securities being offered, a description 

14 of the competitive environment for such 

15 project or enterprise, including any major 

16 changes in such competitive environment 

17 in the last 10 years, any engineering or fi18 nancial feasibility reports or studies on the 

19 construction and operation of the project 

20 or enterprise, and a description of any ad21 ditional financing required to complete the 

22 project or enterprise, including whether 

23 and when such additional financing has 

24 been, or will be, procured; 


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1 ‘‘(xi) a description of the intended use 

2 of the proceeds of the offering; 

3 ‘‘(xii) a statement of counsel’s opinion 

4 as to the legality, validity, and enforce5 ability of the issuance of the securities to 

6 be offered; 

7 ‘‘(xiii) a description of any material 

8 conflicts of interest of the issuer or other 

9 obligated person, and any other party in10 volved in the offering; and 

11 ‘‘(xiv) such other similar and specific 

12 information as the Commission may by 

13 rule or regulation require as necessary or 

14 appropriate in the public interest or for the 

15 protection of investors. 

16 ‘‘(C) PRELIMINARY FORM OF CERTAIN IN17 FORMATION.—In the case of an official state18 ment prepared for an issue of municipal securi19 ties before any sale of such issue, the informa20 tion specified in clauses (viii) and (ix) of sub21 paragraph (B) may be set forth in preliminary 

22 form. 

23 ‘‘(3) FORM OF INFORMATION AND ACCOUNTING

24 METHODS.—The Commission may— 


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1 ‘‘(A) prescribe, for reports and official 

2 statements prepared pursuant to this sub3 section, the form in which the required informa4 tion, including financial statements, shall be set 

5 forth, and the accounting methods to be fol6 lowed in the preparation of financial state7 ments; or 

8 ‘‘(B) recognize forms for such information 

9 and accounting methods for such financial 

10 statements that are established by a standard 

11 setting body recognized by the Commission. 

12 ‘‘(4) INTERNAL CONTROLS AND SYSTEMS FOR

13 LARGE ISSUERS.— 

14 ‘‘(A) IN GENERAL.—Any issuer of, or 

15 other obligated person with respect to, munic16 ipal securities with outstanding municipal secu17 rities the aggregate principal amount of which 

18 exceeds $10,000,000 shall adopt internal con19 trols and systems, including written policies and 

20 procedures that, at a minimum— 

21 ‘‘(i) clearly identify the officials re22 sponsible for each aspect of disclosure de23 scribed in paragraph (2)(B); 


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1 ‘‘(ii) clearly state the process by which 

2 official statements described by paragraph 

3 (2)(A) are drafted and reviewed; and 

4 ‘‘(iii) provide checks and balances to 

5 ensure adequate supervision and reason6 able disbursement of responsibilities. 

7 ‘‘(B) STATEWIDE SYSTEMS.—The Commis8 sion may provide by rule that the provisions of 

9 this paragraph may be satisfied with respect to 

10 an issuer or other obligated person within a 

11 State by a statewide system of disclosure con12 trols and disclosure education for such State.’’. 

13 (b) SAFE HARBOR FOR FORWARD-LOOKING STATE14 MENTS.—Section 21E(a) of the Securities Exchange Act 

15 of 1934 (15 U.S.C. 78u–5(a)) is amended— 

16 (1) by redesignating paragraphs (2), (3), and 

17 (4) as paragraphs (3), (4), and (5), respectively; 

18 (2) by inserting after paragraph (1) the fol19 lowing: 

20 ‘‘(2) an issuer or other obligated person that is 

21 subject to and in compliance with the requirements 

22 of section 15B(f);’’; 

23 (3) in paragraph (3), as so redesignated, by 

24 striking ‘‘such issuer’’ and inserting ‘‘an issuer or 


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1 other obligated person described in paragraph (1) or 

2 (2)’’; 

3 (4) in paragraph (4), as so redesignated, by 

4 striking ‘‘such issuer making a statement on behalf 

5 of such issuer’’ and inserting ‘‘an issuer or other ob6 ligated person described in paragraph (1) or (2) 

7 making a statement on behalf of such issuer or other 

8 obligated person’’; and 

9 (5) in paragraph (5), as so redesignated, by 

10 striking ‘‘such issuer or information derived from in11 formation provided by such issuer’’ and inserting 

12 ‘‘an issuer or other obligated person described in 

13 paragraph (1) or (2) or information derived from in14 formation provided by such issuer or other obligated 

15 person’’. 

16 (c) CONFORMING AMENDMENTS.— 

17 (1) DEFINITION OF EXEMPTED SECURITY.— 

18 Section 3(a)(12)(B)(ii) of the Securities Exchange 

19 Act of 1934 (15 U.S.C. 78c(a)(12)(B)(ii)) is amend20 ed by striking ‘‘sections 15 and 17A’’ and inserting 

21 ‘‘sections 15, 15B(f) and 17A’’. 

22 (2) AUTHORITY TO EXEMPT ISSUERS.—Section 

23 12(h) of the Securities Exchange Act of 1934 (15 

24 U.S.C. 78l(h)) is amended by striking ‘‘or 15(d)’’ 

25 and inserting ‘‘15(d), or 15B(f)’’. 


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1 SEC. 4. EFFECTIVE DATE. 

2 Each amendment made by this Act shall take effect 

3 on the date that the Securities and Exchange Commis4 sion— 

5 (1) determines is appropriate in the public in6 terest and for the protection of investors; and 

7 (2) notifies the Congress of such determination. 

Æ 


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