On August 20, 2018, the U.S. Securities and Exchange Commission (SEC) adopted amendments to Rule 15c2-12 of the Securities and Exchange Act of 1934. These amendments have added new required continuing disclosure obligations of municipal bond issuers and obligated parties.  

The SEC’s amendments require that continuing disclosure agreements executed after the compliance period include two new reporting events, in addition to the other existing listed events set forth under Rule 15c2-12. Notice of these events to bond holders must be made within 10 days of their occurrence on the Municipal Securities Rule Making Board’s EMMA system. They are:

(1)        incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material; and

(2)        default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties.

The SEC has announced that the effective date for these notices is October 30, 2018, with a compliance date of February 27, 2019.  These amendments will only affect continuing disclosure agreements entered into on or after this compliance date.  

Be sure to talk with your financial advisor or bond counsel about how this change can affect your local government.

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