We would like to remind our clients that the new amendments to Rule 15c2-12 of the Securities Exchange Act took effect on February 27, 2019. The amendment changed the reporting requirements for issuers and conduit borrowers under their continuing disclosure agreements for bonds issued on and after February 27, 2019.

The amendments to Rule 15c2-12 add two new requirements related to financial obligations, including private placements and bank loans.

The amendments add transparency to the securities market by increasing information publicly disclosed about material financial obligations incurred by issuers and obligated persons. Specifically, the amendments revise the list of event notices that certain brokers, dealers, and municipal securities dealers must provide to the Municipal Securities Rulemaking Board (MSRB).

These two amendments to Rule 15c2-12 state, specifically:

• Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material.
• Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

Financial obligation is defined as:(i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with this rule.

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