Recent SEC Rule Changes And Implications For Municipal Bond Issuers And Borrowers

SEC Rule 15c2-12: Background

On July 15, 2009, the SEC approved proposed amendments to its Rule 15c2-12 (Rule). The SEC has proposed that these amendments, in their final form following public comment, will become effective the third month following the approval of the final changes to the Rule. These proposed amendments are the first significant overhaul of the Rule since the base version, which was adopted in 1989, was amended in 1994 to include secondary market disclosure requirements. These amendments will have significant implications for municipal issuers and borrowers of the proceeds of municipal bonds. The effects of these amendments are outlined in this alert.

Rule 15c2-12 provides the basic framework for secondary market disclosure by issuers and borrowers in the municipal bond market. The SEC lacks statutory jurisdiction over municipal issuers, other than limited, but significant, jurisdiction and oversight that derives from anti-fraud laws, including