I 114th CONGRESS 2d Session H. R. 6488 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. Short title This Act may be cited as the Municipal Securities Disclosure Act of 2016 . 2. Certain private activity bonds subject to registration Section 3(a)(2) of the Securities Act of 1933 ( 15 U.S.C. 77c(a)(2) ) is amended by striking or any security which is an industrial development bond and all that follows through section 103(c) does not apply to such security; . 3. Municipal securities disclosure (a) In general Section 15B of the Securities Exchange Act of 1934 ( 15 U.S.C. 78o–4 ) is amended— (1) in subsection (e)(8), by inserting after municipal corporate instrumentality of a State the following: or of a political subdivision of a State ; and (2) by adding at the end the following: (f) Municipal securities disclosure (1) Periodic reports and reports of certain enumerated events (A) In general Any issuer of, or obligated person with respect to, municipal securities which has outstanding during any portion of a fiscal year an aggregate principal amount of municipal securities exceeding such sums as determined by the Commission shall prepare annual periodic reports and, in a timely manner, reports of certain enumerated events, as defined by rule or regulation of the Commission, in such form and in such time periods as the Commission may prescribe as being necessary or appropriate in the public interest or for the protection of investors. (B) Deadline The Commission shall determine the deadline for when a periodic report described under subparagraph (A) shall be prepared. (C) Authority to scale requirements In issuing rules to carry out subparagraphs (A) and (B), the Commission may set different requirements for different classes of issuers or other obligated persons, including for issuers or other obligated persons of different sizes, as appropriate. (2) Official statements for primary offerings (A) In general It shall be unlawful for any issuer of, or obligated person with respect to, municipal securities that offers or sells an issue of municipal securities in a public offering, the aggregate principal amount of which exceeds an amount to be determined by the Commission, to make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any municipal security unless such issuer or other obligated person, prior to the offer or sale, prepares and disseminates an official statement in accordance with such rules and regulations as the Commission may prescribe as being necessary or appropriate in the public interest or for the protection of investors. (B) Contents The official statement described in subparagraph (A) shall contain such information as the Commission may, in its discretion, by rule or regulation prescribe, including— (i) an identification and description of the issuer of, or any other obligated person with respect to, the securities being offered; (ii) a description of any legal limitation on the incurrence of indebtedness by the issuer, other obligated person, or the taxing authority of the issuer; (iii) a description of the issuer’s or other obligated person’s debt structure, including information with respect to amounts of authorized and outstanding debt, estimated amount of short-term debt, character of amortization provisions of debt, sinking fund requirements, security for debt, nature and extent of guaranteed debt, and debt service requirements; (iv) a description of the nature and extent of other material contingent liabilities or commitments of the issuer or other obligated person that could affect timely repayment of the subject debt, including any loans or alternative financings; (v) if any payment of principal or interest on any security of the issuer or any predecessor thereof has been defaulted on, or has been postponed or delayed, during the 10 years preceding the date of the official statement, a description of the date, amounts, and circumstances of such default, postponement, or delay and of the terms of any succeeding arrangements thereof; (vi) if the securities are supported by taxes (including special assessments or payments in lieu of taxes)— (I) a description of the issuer’s or other obligated person’s tax authority and structure relating to the specific tax or taxes that serve as security for the debt over the 5 years preceding the date of the official statement, including the nature of taxes levied, tax rates, real and personal property valuation and assessment procedures, amounts of property valuations and assessments, amounts of tax levies, amounts of tax collections, and delinquent tax procedures and experience; (II) if the applicable taxes have not been levied as of the date of the official statement, an estimate of the future tax revenues during the term of the securities, including the basis for such estimate; and (III) a description of the issuer’s or other obligated person’s major taxpayers relating to the specific tax or taxes that serve as security for the debt; (vii) if material to the type of debt being offered, the financial statements of the issuer or other obligated person— (I) in such detail and form, and for such periods beginning not earlier than the 5th fiscal year of the issuer or other obligated person ending before the date of the official statement, as the Commission may prescribe; and (II) for any fiscal year beginning on or after December 31, 2015, that are audited and reported on by an independent public, or certified accountant or examiner from an independent State agency authorized by law to perform such functions, in such manner as the Commission may prescribe; (viii) a description of the offering, including amount to be offered, price, plan of distribution, and underwriting arrangements and compensation; (ix) a description of the securities to be offered, including whether the securities are secured by collateral or property, or other credit enhancements, events of default, payment of principal and interest, sinking fund, redemption, debt reserve funds, priority, and rights of security holders to bring suit against the issuer or other obligated person; (x) a description of any project or enterprise of the issuer or other obligated person to be financed from the proceeds of the securities being offered, a description of the competitive environment for such project or enterprise, including any major changes in such competitive environment in the last 10 years, any engineering or financial feasibility reports or studies on the construction and operation of the project or enterprise, and a description of any additional financing required to complete the project or enterprise, including whether and when such additional financing has been, or will be, procured; (xi) a description of the intended use of the proceeds of the offering; (xii) a statement of counsel’s opinion as to the legality, validity, and enforceability of the issuance of the securities to be offered; (xiii) a description of any material conflicts of interest of the issuer or other obligated person, and any other party involved in the offering; and (xiv) such other similar and specific information as the Commission may by rule or regulation require as necessary or appropriate in the public interest or for the protection of investors. (C) Preliminary form of certain information In the case of an official statement prepared for an issue of municipal securities before any sale of such issue, the information specified in clauses (viii) and (ix) of subparagraph (B) may be set forth in preliminary form. (3) Form of information and accounting methods The Commission may— (A) prescribe, for reports and official statements prepared pursuant to this subsection, the form in which the required information, including financial statements, shall be set forth, and the accounting methods to be followed in the preparation of financial statements; or (B) recognize forms for such information and accounting methods for such financial statements that are established by a standard setting body recognized by the Commission. (4) Internal controls and systems for large issuers (A) In general Any issuer of, or other obligated person with respect to, municipal securities with outstanding municipal securities the aggregate principal amount of which exceeds $10,000,000 shall adopt internal controls and systems, including written policies and procedures that, at a minimum— (i) clearly identify the officials responsible for each aspect of disclosure described in paragraph (2)(B); (ii) clearly state the process by which official statements described by paragraph (2)(A) are drafted and reviewed; and (iii) provide checks and balances to ensure adequate supervision and reasonable disbursement of responsibilities. (B) Statewide systems The Commission may provide by rule that the provisions of this paragraph may be satisfied with respect to an issuer or other obligated person within a State by a statewide system of disclosure controls and disclosure education for such State. . (b) Safe harbor for forward-Looking statements Section 21E(a) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78u–5(a) ) is amended— (1) by redesignating paragraphs (2), (3), and (4) as paragraphs (3), (4), and (5), respectively; (2) by inserting after paragraph (1) the following: (2) an issuer or other obligated person that is subject to and in compliance with the requirements of section 15B(f); ; (3) in paragraph (3), as so redesignated, by striking such issuer and inserting an issuer or other obligated person described in paragraph (1) or (2) ; (4) in paragraph (4), as so redesignated, by striking such issuer making a statement on behalf of such issuer and inserting an issuer or other obligated person described in paragraph (1) or (2) making a statement on behalf of such issuer or other obligated person ; and (5) in paragraph (5), as so redesignated, by striking such issuer or information derived from information provided by such issuer and inserting an issuer or other obligated person described in paragraph (1) or (2) or information derived from information provided by such issuer or other obligated person . (c) Conforming Amendments (1) Definition of exempted security Section 3(a)(12)(B)(ii) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a)(12)(B)(ii) ) is amended by striking sections 15 and 17A and inserting sections 15, 15B(f) and 17A . (2) Authority to exempt issuers Section 12(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78 l (h)) is amended by striking or 15(d) and inserting 15(d), or 15B(f) . 4. Effective date Each amendment made by this Act shall take effect on the date that the Securities and Exchange Commission— (1) determines is appropriate in the public interest and for the protection of investors; and (2) notifies the Congress of such determination.