SEC Alert Emphasizes Due Diligence And Disclosure Procedures For Municipal Securities

The Securities and Exchange Commission (SEC) released a National Examination Risk Alert on March 19, 2012 (the "Alert") that highlighted a number of failures in the due diligence and disclosure process for municipal securities offerings. The Alert highlights the SEC's increasing emphasis on due diligence and disclosure in the municipal securities markets and states the SEC's belief in the importance of a documented due diligence process for municipal securities as well as the need for continuing disclosure under Securities Exchange Act Rule 15c2-12 (Rule 15c2-12). The Alert recognizes that many underwriters have not established adequate procedures to ensure due diligence and disclosure compliance in accordance with Rule 15c2-12, MSRB Rule G-27 and other federal securities laws. The Alert urges underwriters as well as issuers of municipal securities to implement these types of procedures and comply with the requirements of the securities laws.