[Federal Register Volume 74, Number 139 (Wednesday, July 22, 2009)]
[Notices]
[Pages 36300-36302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17353]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60314; File No. SR-MSRB-2009-09]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to Rule G-32, 
on Disclosures in Connection With Primary Offerings, Form G-32, and the 
Primary Market Disclosure and Primary Market Subscription Services of 
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 
require brokers, dealers and municipal securities dealers (``dealers'') 
acting as underwriters, placement agents or remarketing agents for 
primary offerings of municipal securities (``underwriters'') to provide 
to the Electronic Municipal Market Access system (``EMMA'') and to make 
available on the EMMA Web portal and through the EMMA primary market 
subscription service, information about whether the issuer or other 
obligated person has undertaken to provide continuing disclosures, the 
identity of any obligated persons other than the issuer, and the timing 
by which such issuers or obligated persons have agreed to provide 
annual financial and operating data. 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.
    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 Rule G-32 and 
Form G-32 to require underwriters of primary offerings of municipal 
securities to submit to the MSRB's EMMA system, as part of their 
primary offering submission obligation under Rule G-32(b), certain key 
items of information relating to continuing disclosure undertakings 
made by issuers and other obligated persons in connection with such 
primary offerings. These items of information would be made available 
to the public through the EMMA Web portal and are intended to inform 
investors in advance whether continuing disclosures will be made 
available with respect to a particular municipal security, from and 
about whom such continuing disclosures are expected to be made, and the 
timing by which such disclosures should be made available. The items of 
information regarding continuing disclosure undertakings to be provided 
by underwriters through Form G-32 would include:
    <bullet> Whether the issuer or other obligated persons have agreed 
to undertake to provide continuing disclosure information as 
contemplated by Securities Exchange Act Rule 15c2-12;
    <bullet> The name of any obligated person, other than the issuer of 
the municipal securities, that has or will undertake, or is otherwise 
expected to provide, continuing disclosure pursuant to the continuing 
disclosure undertaking;
    <bullet> The date or dates identified in the continuing disclosure 
undertaking, pursuant to Securities Exchange Act Rule 15c2-
12(b)(5)(ii)(C) or otherwise, by which annual financial information is 
expected to be submitted each year by the issuer and/or any obligated 
persons to the EMMA system; and
    <bullet> Contact information for a representative of the issuer 
and/or any obligated persons for purposes of establishing continuing 
disclosure submission accounts for such issuer and/or obligated persons 
in connection with their submissions to the EMMA system.
    The underwriter would be required to provide information regarding 
whether the issuer or other obligated persons have agreed to undertake 
to provide continuing disclosure information as contemplated by 
Securities Exchange Act Rule 15c2-12 by no later than the date of first 
execution of transactions in municipal securities sold in the primary 
offering. The remaining items of information would be required to be 
provided by the closing date of the primary offering. The name or names 
of obligated persons to be provided would be of the entity acting as an 
obligated person, not an individual at such entity, unless the 
obligated person is in fact an individual. The date by which the issuer 
or obligated person has undertaken to submit annual financial 
information would be submitted as a specific month and day, accurate as 
of the closing of the primary offering.\3\ If annual financial 
information is expected to be submitted by more than one entity and 
such information is expected to be submitted on different dates, each 
such date provided would be matched to the appropriate issuer and/or 
obligated person. Underwriters currently are able to provide contact 
information for issuer or obligated person representatives with respect 
to current and past primary offerings through EMMA on a voluntary 
basis. The proposed rule change would require that such information be 
provided as part of the underwriter's Form G-32 submission process for 
new primary offerings.
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    \3\ \\ For example, EMMA would not accept a submission of 
information stating that the annual financial information will be 
provided within a particular number of days after the end of the 
fiscal year since investors and other market participants may not 
have ready access to information about the issuer or obligated 
person's fiscal year. Simultaneous with this filing, the MSRB is 
filing with the Commission a proposed rule change that would amend 
EMMA's continuing disclosure service to, among other things, allow 
an issuer or obligated person to publish on the public EMMA Web 
portal, on a voluntary basis, information about its undertaking to 
provide audited financial statements within 120 days after the end 
of the fiscal year. See SR-MSRB-2009-10 (July 14, 2009).
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    Until closing, the underwriter would be required to update promptly 
any information it has previously provided on Form G-32 which may have 
changed

[[Page 36301]]

or to correct promptly any inaccuracies in such information, and would 
be responsible for ensuring that such information provided by it is 
accurate as of the closing date. So long as the underwriter has 
provided such information accurately as of the closing date, it would 
not be obligated to update the information provided if there are any 
subsequent changes to such information, such as additions, deletions or 
modifications to the identities of obligated persons or changes in the 
timing for providing annual financial information. Issuers and 
obligated persons will be able to make changes to such information 
through their submission accounts established in connection with EMMA's 
continuing disclosure service.
    Information regarding whether an offering is subject to a 
continuing disclosure undertaking, the names of obligated persons and 
the dates for providing annual financial information would be displayed 
on the EMMA Web portal and also would be included in EMMA's primary 
market disclosure subscription service.\4\ These items are intended to 
provide investors and others with information on the expected 
availability of disclosures following the initial issuance of the 
securities. In particular, users of the EMMA Web portal would be able 
to determine which obligated persons are expected to submit annual 
financial information, audited financial statements and material event 
notices on an on-going basis, as well as the date each year by which 
they should expect to have access to the annual financial information.
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    \4\ Contact information for issuers and obligated persons 
provided by underwriters would be used by the MSRB solely for 
purposes of inviting such issuers and obligated persons to establish 
submission accounts with the MSRB and will not be displayed on the 
EMMA Web portal and will not be included in the primary market 
disclosure subscription service.
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2. Statutory Basis
    The MSRB has adopted the proposed rule change pursuant to Section 
15B(b)(2)(C) of the Act,\5\ which provides that the MSRB's rules shall:
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    \5\ 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. The information that underwriters 
would provide and that would be made available to the public with 
regard to the continuing disclosure undertakings of issuers and 
obligated persons would assist investors to understand whether and when 
they should expect to have access to key continuing disclosure 
information in the future. Investors and other market participants 
would be able to include such assessment of on-going access to 
information in the mix of factors upon which they may evaluate their 
investment decisions. The issuer and obligated person contact 
information would assist such persons to establish EMMA submission 
accounts and thereby promote more efficient and timely submissions of 
continuing disclosure documents.

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 underwriters 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 
underwriters. Specifically, the addition of these items of information 
to the existing EMMA primary market submission process would not 
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. The proposed rule change also would not impose 
any additional burdens on competition among issuers of municipal 
securities since the proposed rule change does not impose any direct or 
indirect obligations on issuers but merely provides for disclosure of 
information by underwriters regarding continuing disclosure 
undertakings entered into under Exchange Act Rule 15c2-12.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    In a notice published by the MSRB on January 31, 2008, the MSRB 
described its plan for implementing a continuing disclosure service 
that would be integrated into other services to be offered through 
EMMA.\6\ In particular, the MSRB stated its plan to institute the 
continuing disclosure service to accept submissions of continuing 
disclosure information in a designated electronic format directly from 
issuers, obligated persons and their designated agents acting on their 
behalf. Among other things, the notice sought comment on whether 
underwriters for new issues should be required to submit to the MSRB 
information about (i) Whether a continuing disclosure undertaking 
exists, (ii) the identity of any obligated persons other than the 
issuer, and (iii) the date identified in the continuing disclosure 
undertaking by which annual financial information is expected to be 
disseminated. Such information would be provided by underwriters 
through the same information submission process as, and simultaneously 
with, the information to be provided in connection with official 
statement submissions. The notice also asked whether other items of 
information should be required, such as the identity of designated 
agents for submitting continuing disclosure or the criteria for 
identifying obligated persons subject to the continuing disclosure 
obligations.
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    \6\ See MSRB Notice 2008-05 (January 31, 2008).
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    Four commentators provided comments on the issue of underwriter 
submission of information relating to the issuer's continuing 
disclosure obligations.\7\ First Southwest supported requiring the 
submission of the three items of information identified in the notice 
and stated that no other

[[Page 36302]]

information in addition to the three items listed in the notice should 
be required. NABL, NAHEFFA and SIFMA provided comments on the items 
relating to identification of obligated persons and the date on which 
annual financial information is expected to be disseminated.
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    \7\ See letters from Robert Donovan, Executive Director, Rhode 
Island Health and Educational Building Corporation, Stephen M. 
Fillebrown, Director of Research, Investor Relations and Compliance, 
NJ Health Care Facilities Financing Authority, and Charles A. 
Samuels and Meghan B. Burke, Mintz Levin Cohn Ferris Glovsky and 
Popeo PC, on behalf of National Association of Health and 
Educational Facilities Finance Authorities (``NAHEFFA''), to Ernesto 
A. Lanza, Senior Associate General Counsel, MSRB, dated March 3, 
2008; Jack Addams, Managing Director, First Southwest Company 
(``First Southwest''), to Mr. Lanza, dated February 25, 2008; J. 
Foster Clark, President, National Association of Bond Lawyers 
(``NABL''), to Mr. Lanza, dated February 25, 2008; Leslie Norwood, 
Managing Director and Associate General Counsel, Securities Industry 
and Financial Markets Association (``SIFMA''), to Mr. Lanza, dated 
February 25, 2008.
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    With respect to identification of obligated persons, NABL and SIFMA 
noted that only those obligated persons for whom financial or operating 
data is provided in the official statement are relevant. NABL suggested 
only requiring underwriters ``to identify those persons expressly 
specified in the continuing disclosure undertaking who will be required 
to make continuing disclosure filings or to state that such persons 
will be determined by the functional descriptions contained in the 
continuing disclosure undertaking.'' SIFMA stated that a requirement 
for the underwriter to provide such information is ``unnecessarily 
complicated since the official statement itself, which is on the 
portal, has a summary paragraph stating who will be filing continuing 
disclosure and where it will be filed.''
    The proposed rule change would require that underwriters provide 
the name of any obligated person (other than the issuer) that would be 
providing continuing disclosures pursuant to the continuing disclosure 
undertaking, rather than all obligated persons regardless of whether 
such obligated persons will be providing disclosure information. The 
MSRB believes that collecting the identity of obligated persons in a 
fielded manner that permits automated indexing and search functions is 
an important feature that would make the EMMA Web portal considerably 
more useful for users. Such indexed information would assist EMMA Web 
users in finding some or all of the offerings for a particular 
obligated person, thereby allowing the user to review the continuing 
disclosure undertakings that more fully spell out how the continuing 
disclosure obligations will be fulfilled.
    With respect to the expected date of filing of annual financial 
information, NABL and SIFMA questioned the value of providing this 
information. NABL noted that the information is already provided in the 
official statement's description of the continuing disclosure 
undertaking and can become confusing if several obligated persons are 
required to file annual filings on different dates, while SIFMA noted 
that the information can be vague, often based on a stated period of 
time following the end of a fiscal year, and will become readily 
apparent based on the pattern of posting over time. NAHEFFA sought 
clarification of the purpose for requiring this date and requested that 
the data entry be flexible enough to reflect a deadline measured from 
the end of a fiscal year or other milepost, rather than a date certain.
    The MSRB believes that there is considerable value in providing the 
expected date of submission of annual financial information in a manner 
that is extracted from the official statement. The MSRB would require 
that such information be provided in the form of a specific month and 
day. This would permit investors and the general public to readily 
identify when such disclosures should become available from each issuer 
or obligated person expected to provide the annual filings. Issuers and 
obligated persons would be able to update the timing requirement, as 
well as the identity of any obligated persons, through EMMA as 
appropriate.

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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#5725223b327a34383a3a323923241724323479303821"><span class="__cf_email__" data-cfemail="344641585119575b5959515a4047744751571a535b42">[email protected]</span></a>. Please include 
File Number SR-MSRB-2009-09 on the subject line.

Paper Comments

    <bullet> 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-2009-09. 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-2009-09 and should be 
submitted on or before August 12, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-17353 Filed 7-21-09; 8:45 am]
BILLING CODE 8010-01-P


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