```

[Federal Register Volume 90, Number 22 (Tuesday, February 4, 2025)]
[Notices]
[Pages 8962-8964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02163]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-330, OMB Control No. 3235-0372]

Submission for OMB Review; Comment Request; Extension: Municipal 
Securities Disclosure (Exchange Act Rule 15c2-12)

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') has submitted to the Office of Management 
and Budget (``OMB'') a request for approval of extension of the 
previously approved collection of information provided for in Rule 
15c2-12--Municipal Securities Disclosure (17 CFR 240.15c2-12) under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (``Exchange 
Act'').
    In connection with offerings of municipal securities, paragraph (b) 
of Rule 15c2-12 \1\ requires Participating Underwriters: \2\ (1) to 
obtain and review an official statement ``deemed final'' by an issuer 
of the securities, except for the omission of specified information, 
prior to making a bid, purchase, offer, or sale of municipal 
securities; \3\ (2) in non-competitively bid offerings, to send, upon 
request, a copy of the most recent preliminary official statement (if 
one exists) to potential customers; \4\ (3) to contract with the issuer 
to receive, within a specified time, sufficient copies of the final 
official statement to comply with Rule 15c2-12's delivery requirement 
and the rules of the Municipal Securities Rulemaking Board (``MSRB''); 
\5\ (4) to send, upon request, a copy of the final official statement 
to potential customers for a specified period of time; \6\ and (5) 
before purchasing or selling municipal securities in connection with an 
offering, to reasonably determine that the issuer or the obligated 
person has undertaken, in a written agreement or contract, for the 
benefit of holders of such municipal securities, to provide certain 
information on a continuing basis to the MSRB in an electronic format 
as prescribed by the MSRB.\7\ The information to be provided consists 
of: (1) certain annual financial and operating information and audited 
financial statements (``annual filings''); \8\ (2) notices of the 
occurrence of any of certain specific events (``event notices''); \9\ 
and (3) notices of the failure of an issuer or obligated person to make 
a submission required by a continuing disclosure agreement (``failure 
to file notices'').\10\ Annual filings, event notices, and failure to 
file notices may be collectively referred to as ``continuing disclosure 
documents.''
---------------------------------------------------------------------------

    \1\ 17 CFR 240.15c2-12(b).
    \2\ The term ``Participating Underwriter'' means any broker, 
dealer, or municipal securities dealer that acts as an underwriter 
in connection with an ``Offering,'' i.e., a primary offering of 
municipal securities with an aggregate principal amount of 
$1,000,000 or more. 17 CFR 240.15c2-12(a) (defining ``Participating 
Underwriter'' and ``Offering'').
    \3\ 17 CFR 240.15c2-12(b)(1).
    \4\ 17 CFR 240.15c2-12(b)(2).
    \5\ 17 CFR 240.15c2-12(b)(3).
    \6\ 17 CFR 240.15c2-12(b)(4).
    \7\ 17 CFR 240.15c2-12(b)(5)(i).
    \8\ 17 CFR 240.15c2-12(b)(5)(i)(A)-(B).
    \9\ 17 CFR 240.15c2-12(b)(5)(i)(C).
    \10\ 17 CFR 240.15c2-12(b)(5)(i)(D).
---------------------------------------------------------------------------

    Rule 15c2-12 is intended to enhance disclosure, and thereby reduce 
fraud, in the municipal securities market by establishing standards for 
obtaining, reviewing, and disseminating information about municipal 
securities by their underwriters.\11\
---------------------------------------------------------------------------

    \11\ See generally Municipal Securities Disclosure, Exchange Act 
Release No. 26985 (June 28, 1989), 54 FR 28799 (July 10, 1989); 
Municipal Securities Disclosure, Exchange Act Release No. 34961 
(November 10, 1994), 59 FR 59590 (November 17, 1994); Amendment to 
Municipal Securities Disclosure, Exchange Act Release No. 59062 
(December 5, 2008), 73 FR 76104 (December 15, 2008); Amendments to 
Municipal Securities Disclosure, Exchange Act Release No. 62184A 
(May 26, 2010), 75 FR 33100 (June 10, 2010); Amendments to Municipal 
Securities Disclosure, Exchange Act Release No. 83885 (August 20, 
2018), 83 FR 44700 (August 31, 2018).
---------------------------------------------------------------------------

    Municipal offerings of less than $1 million are exempt from the 
rule,\12\ as are offerings of municipal securities issued in large 
denominations that (i) are sold to no more than 35 sophisticated 
investors (``limited offering exemption''), or (ii) have short-term 
maturities.\13\
---------------------------------------------------------------------------

    \12\ 17 CFR 240.15c2-12(a).
    \13\ 17 CFR 240.15c2-12(d)(1).
---------------------------------------------------------------------------

    The required Federal Register notice with a 60-day comment period 
soliciting comments on this collection of information was 
published.\14\ The Commission received four comment letters in response 
to this comment solicitation.\15\ Although Commission staff appreciates 
the information received from these four commenters, it is the view of 
staff that the estimates contained in the Federal Register notice 
remain valid and the staff has not made any changes to the Commission's 
burden estimates based on these comments. As discussed more fully in 
the Supporting Statement,\16\ it is the view of Commission staff that 
the comments received either: (i) addressed the information collection 
burden generally but did not provide any quantified alternative 
estimate or specific supporting data related to the burden; (ii) 
included recommendations that were previously considered and addressed 
by the Commission during rulemaking for the 2018 Amendments, and the 
commenter provided no rationale as to why the Commission should change 
the conclusions it had previously reached; or (iii) included suggested 
changes to the Rule itself that would need to be effected pursuant to a 
Commission rulemaking and are therefore beyond the scope of the PRA 
analysis.
---------------------------------------------------------------------------

    \14\ See Proposed Collection; Comment Request; Extension: 
Municipal Securities Disclosure (Exchange Act Rule 15c2-12), 89 FR 
88843 (November 8, 2024).
    \15\ Letters from Richard Li (``Li Letter''), January 6, 2025 
(personally identifiable information redacted by Commission staff); 
Emily S. Brock, Director, Federal Liaison Center, Government Finance 
Officers Association (``GFOA Letter''), January 7, 2025; M. Jason 
Akers, President, National Association of Bond Lawyers (``NABL 
Letter''), January 7, 2025; Leslie M. Norwood, Managing Director and 
Associate General Counsel, and Gerald O'Hara, Vice President and 
Assistant General Counsel, Securities Industry and Financial Markets 
Association (``SIFMA Letter''), January 7, 2025. In addition, 
Commission staff discussed the 60-day notice, among other things, 
during a video conference with representatives of Digital Assurance 
Certification, LLC (``DAC Bond''). See Memorandum from the Office of 
Municipal Securities regarding a November 12, 2024 meeting with 
representatives of DAC Bond.
    \16\ See PRA Supporting Statement for Rule 15c2-12, Section 8, 
available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202410-3235-009.
---------------------------------------------------------------------------

    Nonetheless, as discussed more fully in the Supporting 
Statement,\17\ Commission staff has determined to take under advisement 
many of the comments received and will further study whether they 
should be applied in future PRA analyses and/or merit potential 
guidance or rulemaking activities related to Rule 15c2-12.\18\ Among 
other things, staff will take under advisement comments suggesting that 
the Commission should: (i) more effectively survey market participants 
to obtain PRA burden estimates; (ii)

[[Page 8963]]

analyze the burdens that Rule 15c2-12 imposes on broker-dealers by 
offering type (negotiated offering, competitive offering, or private 
placement), and by the number of underwriters involved in the 
transaction; (iii) analyze the burdens that compliance with the limited 
offering exemption imposes on broker-dealers; (iv) update or amend 
existing guidance on Rule 15c2-12; and (v) update or amend Rule 15c2-12 
itself (e.g., by removing the ``rating change'' event notice).
---------------------------------------------------------------------------

    \17\ See id.
    \18\ Commission staff does not commit to take any course of 
action following further study of these comments.
---------------------------------------------------------------------------

    With respect to hour burdens, the Commission estimates that 
approximately 28,000 issuers, 205 broker-dealers, and the MSRB will 
spend a total of 786,220 hours per year complying with Rule 15c2-12 
over the next three years.\19\ Rule 15c2-12 indirectly imposes ongoing 
third-party disclosure burdens on issuers that determine to engage a 
broker-dealer to act as a Participating Underwriter in an offering of 
municipal securities. The Commission estimates that the total annual 
burden on issuers to comply with Rule 15c2-12 is 662,766 hours.\20\ 
Based on public MSRB data, issuers annually submitted an average of 
approximately 65,082 annual filings to the MSRB over the past three 
years. The Commission estimates that an issuer will require 
approximately seven hours to prepare and submit each annual filing to 
the MSRB. Therefore, the Commission estimates that the total annual 
burden on issuers to prepare and submit 65,082 annual filings to the 
MSRB is 455,574 hours.\21\ Based on public MSRB data, issuers annually 
submitted an average of approximately 49,958 event notices to the MSRB 
over the past three years. The Commission estimates that an issuer will 
require approximately four hours to prepare and submit each event 
notice to the MSRB. Therefore, the Commission estimates that the total 
annual burden on issuers to prepare and submit 49,958 event notices to 
the MSRB is 199,832 hours.\22\ Based on public MSRB data, issuers 
annually submitted an average of approximately 3,680 failure to file 
notices to the MSRB over the past three years. The Commission estimates 
that an issuer will require approximately two hours to prepare and 
submit failure to file notices to the MSRB. Therefore, the total annual 
burden on issuers to prepare and submit 3,680 failure to file notices 
to the MSRB is estimated to be 7,360 hours.\23\
---------------------------------------------------------------------------

    \19\ 662,766 hours (estimated total annual burden on issuers) + 
101,454 hours (estimated total annual burden on broker-dealers) + 
22,000 hours (estimated total annual burden on the MSRB) = 786,220 
hours.
    \20\ 65,082 (estimated average number of annual filings 
submitted by issuers annually in each of the next three years) x 7 
(estimated average number of hours needed to prepare and submit 
each) = 455,574 hours. 49,958 (estimated average number of event 
notices submitted by issuers annually in each of the next three 
years) x 4 (estimated average number of hours needed to prepare and 
submit each) = 199,832 hours. 3,680 (estimated average number of 
failure to file notices submitted by issuers annually in each of the 
next three years) x 2 (estimated average number of hours needed to 
prepare and submit each) = 7,360 hours. 455,574 hours + 199,832 
hours + 7,360 hours = 662,766 hours.
    \21\ See supra note 20.
    \22\ See supra note 20.
    \23\ See supra note 20.
---------------------------------------------------------------------------

    Rule 15c2-12 imposes ongoing third-party disclosure burdens on 
broker-dealers that act as Participating Underwriters in offerings of 
municipal securities. The Commission estimates that the total annual 
burden on broker-dealers to comply with Rule 15c2-12 is 101,454 
hours.\24\ Based on public MSRB data, the Commission estimates that an 
average of 10,968 offerings of municipal securities occurred annually 
over the past three years. Further, based on estimates provided by the 
MSRB, the Commission estimates that, over the past three years, an 
average of 205 broker-dealers served as a Participating Underwriter in 
municipal securities offerings. Accordingly, the Commission estimates 
that approximately 205 broker-dealers could serve as a Participating 
Underwriter in 10,968 municipal securities offerings in each of the 
next three years. The Commission estimates that broker-dealers will 
incur a 15 minute (0.25 hour) burden per issuance of municipal 
securities to reasonably determine that the issuer or obligated person 
has undertaken, in a written agreement or contract, for the benefit of 
holders of municipal securities, to provide continuing disclosure 
documents to the MSRB,\25\ resulting in an annual burden on all broker-
dealers of approximately 2,742 hours.\26\ The Commission further 
estimates that broker-dealers will incur 9 hours of burden per issuance 
of municipal securities to determine whether issuers or obligated 
persons have failed to comply, in all material respects, with any 
previous undertakings in a written contract or agreement specified in 
paragraph (b)(5)(i) of Rule 15c2-12, resulting in an annual burden on 
broker-dealers of 98,712 hours.\27\
---------------------------------------------------------------------------

    \24\ 10,968 (estimated annual issuances) x 0.25 (hourly burden 
for broker-dealers to reasonably determine that the issuer or 
obligated person has undertaken, in a written agreement or contract, 
for the benefit of holders of such municipal securities, to provide 
continuing disclosure documents to the MSRB) = 2,742 hours. 10,968 
(estimated annual issuances) x 9 (average burden estimate per 
issuance for broker-dealers to determine whether issuers or 
obligated persons have failed to comply, in all material respects, 
with any previous undertakings in a written contract or agreement 
specified in paragraph (b)(5)(i) of the Rule) = 98,712 hours. 2,742 
hours + 98,712 hours = 101,454 hours.
    \25\ The Commission understands that most continuing disclosure 
agreements are provided to the broker-dealer by the issuer or 
obligated person and that most of these agreements are standard form 
agreements of limited length. Further, the Commission believes that 
the determination required to be made--that the issuer or obligated 
person has undertaken to provide continuing disclosure documents to 
the MSRB--is a narrow one that does not require a substantial time 
commitment from the broker-dealer. For these reasons, the Commission 
believes the estimate of a 15 minute burden per issuance is 
appropriate.
    \26\ See supra note 24.
    \27\ See supra note 24.
---------------------------------------------------------------------------

    Finally, Rule 15c2-12 imposes ongoing recordkeeping burdens on the 
MSRB. The Commission estimates that the total annual burden on the MSRB 
to comply with Rule 15c2-12 is 22,000 hours. Based on estimates 
provided by the MSRB, the Commission estimates that, over the last 
three years, the MSRB has incurred an annual burden of approximately 
22,000 hours to collect, index, store, retrieve, and make available the 
pertinent continuing disclosure documents under Rule 15c2-12. 
Accordingly, the Commission estimates that the MSRB will incur an 
annual burden of 22,000 hours to collect, index, store, retrieve and 
make available the pertinent documents under Rule 15c2-12 each year 
over the next three years.
    With respect to cost burdens, the Commission estimates that 18,200 
issuers and the MSRB will spend a total of $20,492,000 complying with 
Rule 15c2-12 over the next three years.\28\ The Commission estimates 
that, over the next three years, up to 65% of issuers subject to 
continuing disclosure agreements--approximately 18,200 issuers--may use 
the services of designated agents to submit some or all of their 
continuing disclosure documents to the MSRB. The Commission estimates 
that the average annual cost for an issuer's use of a designated agent 
is $970 each year. Therefore, the Commission estimates that the average 
total annual cost that may be incurred by issuers that use the services 
of a designated agent will be $17,654,000.\29\ In addition, the

[[Page 8964]]

Commission estimates that issuers will retain outside counsel to assist 
with filing approximately 1,000 event notices in each of the next three 
years. The Commission further believes that, for those 1,000 complex 
event notices in which issuers and obligated persons seek assistance 
from outside counsel, one-half of the burden of preparation of the 
event notices will be carried by issuers internally (four hours), and 
the other half of the burden will be carried by outside professionals 
retained by the issuer (four hours). The Commission further estimates 
that the average hourly cost for an issuer's use of outside counsel is 
$400 per hour. Therefore, the Commission estimates the average total 
annual cost incurred by issuers to retain outside counsel to assist in 
the evaluation and preparation of certain event notices will be 
$1,600,000.\30\ Thus, the total estimated cost to issuers to comply 
with the rule is $19,254,000.\31\
---------------------------------------------------------------------------

    \28\ $19,254,000 (estimated total annual cost burden for 
issuers) + $1,238,000 (estimated total annual cost burden for the 
MSRB) = $20,492,000.
    \29\ 28,000 (number of issuers subject to continuing disclosure 
agreements) x 0.65 (percentage of issuers that may use designated 
agents) = 18,200 issuers that may use designated agents. 18,200 x 
$970 (estimated average annual cost for issuer's use of designated 
agent under Rule 15c2-12) = $17,654,000.
    \30\ 1,000 (estimated number of event notices requiring outside 
counsel) x 4 (estimated number of hours for outside attorney to 
assist in the preparation of such event notice) x $400 (hourly wage 
for an outside attorney) = $1,600,000. The Commission recognizes 
that the costs of retaining outside professionals may vary depending 
on the nature of the professional services, but for purposes of this 
PRA analysis we estimate that costs of outside counsel would be an 
average of $400 per hour.
    \31\ $17,654,000 (estimated annual cost for issuer's use of 
designated agent to submit filings) + $1,600,000 (estimated annual 
cost for issuers to employ outside counsel in the examination, 
preparation, and filing of certain event notices) = $19,254,000.
---------------------------------------------------------------------------

    Finally, based on recently obtained data provided by the MSRB, the 
Commission estimates that the MSRB will incur total annual costs of 
approximately $1,238,000 to operate the continuing disclosure service 
for the MSRB's Electronic Municipal Market Access (``EMMA'') system, 
including hardware, software, and external third-party costs such as 
cloud service provider costs.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    The public may view and comment on this information collection 
request at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202410-3235-009 or send an email comment to 
[email protected] within 30 days of the day 
after publication of this notice by March 7, 2025.

    Dated: January 29, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-02163 Filed 2-3-25; 8:45 am]
BILLING CODE 8011-01-P
```