[Federal Register: July 22, 2009 (Volume 74, Number 139)]
[Notices]
[Page 36300-36302]
[DOCID:fr22jy09-129]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60314; File No. SR-MSRB-2009-09]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Proposed Rule Change Relating to Rule G-32,
on Disclosures in Connection With Primary Offerings, Form G-32, and the
Primary Market Disclosure and Primary Market Subscription Services of
the MSRB's Electronic Municipal Market Access System (EMMA[supreg])

July 15, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 14, 2009, the Municipal Securities Rulemaking Board (``MSRB'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the MSRB. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The MSRB has filed with the Commission a proposed rule change to
require brokers, dealers and municipal securities dealers (``dealers'')
acting as underwriters, placement agents or remarketing agents for
primary offerings of municipal securities (``underwriters'') to provide
to the Electronic Municipal Market Access system (``EMMA'') and to make
available on the EMMA Web portal and through the EMMA primary market
subscription service, information about whether the issuer or other
obligated person has undertaken to provide continuing disclosures, the
identity of any obligated persons other than the issuer, and the timing
by which such issuers or obligated persons have agreed to provide
annual financial and operating data. The MSRB has requested an
effective date for the proposed rule change of a date to be announced
by the MSRB in a notice published on the MSRB Web site, which date
shall be no later than nine months after Commission approval of the
proposed rule change and shall be announced no later than sixty (60)
days prior to the effective date.
    The text of the proposed rule change is available on the MSRB's Web
site (http://www.msrb.org/msrb1/sec.asp), at the MSRB's principal
office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change consists of amendments to Rule G-32 and
Form G-32 to require underwriters of primary offerings of municipal
securities to submit to the MSRB's EMMA system, as part of their
primary offering submission obligation under Rule G-32(b), certain key
items of information relating to continuing disclosure undertakings
made by issuers and other obligated persons in connection with such
primary offerings. These items of information would be made available
to the public through the EMMA Web portal and are intended to inform
investors in advance whether continuing disclosures will be made
available with respect to a particular municipal security, from and
about whom such continuing disclosures are expected to be made, and the
timing by which such disclosures should be made available. The items of
information regarding continuing disclosure undertakings to be provided
by underwriters through Form G-32 would include:
     Whether the issuer or other obligated persons have agreed
to undertake to provide continuing disclosure information as
contemplated by Securities Exchange Act Rule 15c2-12;
     The name of any obligated person, other than the issuer of
the municipal securities, that has or will undertake, or is otherwise
expected to provide, continuing disclosure pursuant to the continuing
disclosure undertaking;
     The date or dates identified in the continuing disclosure
undertaking, pursuant to Securities Exchange Act Rule 15c2-
12(b)(5)(ii)(C) or otherwise, by which annual financial information is
expected to be submitted each year by the issuer and/or any obligated
persons to the EMMA system; and
     Contact information for a representative of the issuer
and/or any obligated persons for purposes of establishing continuing
disclosure submission accounts for such issuer and/or obligated persons
in connection with their submissions to the EMMA system.
    The underwriter would be required to provide information regarding
whether the issuer or other obligated persons have agreed to undertake
to provide continuing disclosure information as contemplated by
Securities Exchange Act Rule 15c2-12 by no later than the date of first
execution of transactions in municipal securities sold in the primary
offering. The remaining items of information would be required to be
provided by the closing date of the primary offering. The name or names
of obligated persons to be provided would be of the entity acting as an
obligated person, not an individual at such entity, unless the
obligated person is in fact an individual. The date by which the issuer
or obligated person has undertaken to submit annual financial
information would be submitted as a specific month and day, accurate as
of the closing of the primary offering.\3\ If annual financial
information is expected to be submitted by more than one entity and
such information is expected to be submitted on different dates, each
such date provided would be matched to the appropriate issuer and/or
obligated person. Underwriters currently are able to provide contact
information for issuer or obligated person representatives with respect
to current and past primary offerings through EMMA on a voluntary
basis. The proposed rule change would require that such information be
provided as part of the underwriter's Form G-32 submission process for
new primary offerings.
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    \3\ \\ For example, EMMA would not accept a submission of
information stating that the annual financial information will be
provided within a particular number of days after the end of the
fiscal year since investors and other market participants may not
have ready access to information about the issuer or obligated
person's fiscal year. Simultaneous with this filing, the MSRB is
filing with the Commission a proposed rule change that would amend
EMMA's continuing disclosure service to, among other things, allow
an issuer or obligated person to publish on the public EMMA Web
portal, on a voluntary basis, information about its undertaking to
provide audited financial statements within 120 days after the end
of the fiscal year. See SR-MSRB-2009-10 (July 14, 2009).
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    Until closing, the underwriter would be required to update promptly
any information it has previously provided on Form G-32 which may have
changed

or to correct promptly any inaccuracies in such information, and would
be responsible for ensuring that such information provided by it is
accurate as of the closing date. So long as the underwriter has
provided such information accurately as of the closing date, it would
not be obligated to update the information provided if there are any
subsequent changes to such information, such as additions, deletions or
modifications to the identities of obligated persons or changes in the
timing for providing annual financial information. Issuers and
obligated persons will be able to make changes to such information
through their submission accounts established in connection with EMMA's
continuing disclosure service.
    Information regarding whether an offering is subject to a
continuing disclosure undertaking, the names of obligated persons and
the dates for providing annual financial information would be displayed
on the EMMA Web portal and also would be included in EMMA's primary
market disclosure subscription service.\4\ These items are intended to
provide investors and others with information on the expected
availability of disclosures following the initial issuance of the
securities. In particular, users of the EMMA Web portal would be able
to determine which obligated persons are expected to submit annual
financial information, audited financial statements and material event
notices on an on-going basis, as well as the date each year by which
they should expect to have access to the annual financial information.
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    \4\ Contact information for issuers and obligated persons
provided by underwriters would be used by the MSRB solely for
purposes of inviting such issuers and obligated persons to establish
submission accounts with the MSRB and will not be displayed on the
EMMA Web portal and will not be included in the primary market
disclosure subscription service.
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2. Statutory Basis
    The MSRB has adopted the proposed rule change pursuant to Section
15B(b)(2)(C) of the Act,\5\ which provides that the MSRB's rules shall:
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    \5\ 15 U.S.C. 78o-4(b)(2)(C).

    be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities, to remove
impediments to and perfect the mechanism of a free and open market
in municipal securities, and, in general, to protect investors and
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the public interest.

    The MSRB believes that the proposed rule change is consistent with
the Act in that it serves to remove impediments to and helps perfect
the mechanisms of a free and open market in municipal securities and
would serve to promote the statutory mandate of the MSRB to protect
investors and the public interest. The information that underwriters
would provide and that would be made available to the public with
regard to the continuing disclosure undertakings of issuers and
obligated persons would assist investors to understand whether and when
they should expect to have access to key continuing disclosure
information in the future. Investors and other market participants
would be able to include such assessment of on-going access to
information in the mix of factors upon which they may evaluate their
investment decisions. The issuer and obligated person contact
information would assist such persons to establish EMMA submission
accounts and thereby promote more efficient and timely submissions of
continuing disclosure documents.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB does not believe the proposed rule change would impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The additional items of information submitted
by underwriters to the EMMA system for public dissemination would be
available to all persons simultaneously. In addition to making such
information available for free on the EMMA Web portal to all members of
the public, the MSRB would make such documents and information
available by subscription on an equal and non-discriminatory basis.
Further, the proposed rule change would apply equally to all
underwriters. Specifically, the addition of these items of information
to the existing EMMA primary market submission process would not
compete with other information providers and, to the extent other
information providers were to seek to make such information available
to the public, such providers could obtain the information from the
MSRB through the subscription service on an equal and non-
discriminatory basis. The proposed rule change also would not impose
any additional burdens on competition among issuers of municipal
securities since the proposed rule change does not impose any direct or
indirect obligations on issuers but merely provides for disclosure of
information by underwriters regarding continuing disclosure
undertakings entered into under Exchange Act Rule 15c2-12.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    In a notice published by the MSRB on January 31, 2008, the MSRB
described its plan for implementing a continuing disclosure service
that would be integrated into other services to be offered through
EMMA.\6\ In particular, the MSRB stated its plan to institute the
continuing disclosure service to accept submissions of continuing
disclosure information in a designated electronic format directly from
issuers, obligated persons and their designated agents acting on their
behalf. Among other things, the notice sought comment on whether
underwriters for new issues should be required to submit to the MSRB
information about (i) Whether a continuing disclosure undertaking
exists, (ii) the identity of any obligated persons other than the
issuer, and (iii) the date identified in the continuing disclosure
undertaking by which annual financial information is expected to be
disseminated. Such information would be provided by underwriters
through the same information submission process as, and simultaneously
with, the information to be provided in connection with official
statement submissions. The notice also asked whether other items of
information should be required, such as the identity of designated
agents for submitting continuing disclosure or the criteria for
identifying obligated persons subject to the continuing disclosure
obligations.
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    \6\ See MSRB Notice 2008-05 (January 31, 2008).
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    Four commentators provided comments on the issue of underwriter
submission of information relating to the issuer's continuing
disclosure obligations.\7\ First Southwest supported requiring the
submission of the three items of information identified in the notice
and stated that no other

information in addition to the three items listed in the notice should
be required. NABL, NAHEFFA and SIFMA provided comments on the items
relating to identification of obligated persons and the date on which
annual financial information is expected to be disseminated.
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    \7\ See letters from Robert Donovan, Executive Director, Rhode
Island Health and Educational Building Corporation, Stephen M.
Fillebrown, Director of Research, Investor Relations and Compliance,
NJ Health Care Facilities Financing Authority, and Charles A.
Samuels and Meghan B. Burke, Mintz Levin Cohn Ferris Glovsky and
Popeo PC, on behalf of National Association of Health and
Educational Facilities Finance Authorities (``NAHEFFA''), to Ernesto
A. Lanza, Senior Associate General Counsel, MSRB, dated March 3,
2008; Jack Addams, Managing Director, First Southwest Company
(``First Southwest''), to Mr. Lanza, dated February 25, 2008; J.
Foster Clark, President, National Association of Bond Lawyers
(``NABL''), to Mr. Lanza, dated February 25, 2008; Leslie Norwood,
Managing Director and Associate General Counsel, Securities Industry
and Financial Markets Association (``SIFMA''), to Mr. Lanza, dated
February 25, 2008.
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    With respect to identification of obligated persons, NABL and SIFMA
noted that only those obligated persons for whom financial or operating
data is provided in the official statement are relevant. NABL suggested
only requiring underwriters ``to identify those persons expressly
specified in the continuing disclosure undertaking who will be required
to make continuing disclosure filings or to state that such persons
will be determined by the functional descriptions contained in the
continuing disclosure undertaking.'' SIFMA stated that a requirement
for the underwriter to provide such information is ``unnecessarily
complicated since the official statement itself, which is on the
portal, has a summary paragraph stating who will be filing continuing
disclosure and where it will be filed.''
    The proposed rule change would require that underwriters provide
the name of any obligated person (other than the issuer) that would be
providing continuing disclosures pursuant to the continuing disclosure
undertaking, rather than all obligated persons regardless of whether
such obligated persons will be providing disclosure information. The
MSRB believes that collecting the identity of obligated persons in a
fielded manner that permits automated indexing and search functions is
an important feature that would make the EMMA Web portal considerably
more useful for users. Such indexed information would assist EMMA Web
users in finding some or all of the offerings for a particular
obligated person, thereby allowing the user to review the continuing
disclosure undertakings that more fully spell out how the continuing
disclosure obligations will be fulfilled.
    With respect to the expected date of filing of annual financial
information, NABL and SIFMA questioned the value of providing this
information. NABL noted that the information is already provided in the
official statement's description of the continuing disclosure
undertaking and can become confusing if several obligated persons are
required to file annual filings on different dates, while SIFMA noted
that the information can be vague, often based on a stated period of
time following the end of a fiscal year, and will become readily
apparent based on the pattern of posting over time. NAHEFFA sought
clarification of the purpose for requiring this date and requested that
the data entry be flexible enough to reflect a deadline measured from
the end of a fiscal year or other milepost, rather than a date certain.
    The MSRB believes that there is considerable value in providing the
expected date of submission of annual financial information in a manner
that is extracted from the official statement. The MSRB would require
that such information be provided in the form of a specific month and
day. This would permit investors and the general public to readily
identify when such disclosures should become available from each issuer
or obligated person expected to provide the annual filings. Issuers and
obligated persons would be able to update the timing requirement, as
well as the identity of any obligated persons, through EMMA as
appropriate.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
    The MSRB has requested an effective date for the proposed rule
change of a date to be announced by the MSRB in a notice published on
the MSRB Web site, which date shall be no later than nine months after
Commission approval of the proposed rule change and shall be announced
no later than sixty (60) days prior to the effective date.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-MSRB-2009-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2009-09. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the MSRB. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-MSRB-2009-09 and should be
submitted on or before August 12, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-17353 Filed 7-21-09; 8:45 am]

BILLING CODE 8010-01-P