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Opening Remarks at 2020 Municipal Securities Disclosure Conference

June 16, 2020


Good afternoon. Welcome. I truly appreciate all of you taking the time to join us today as we discuss secondary market disclosure and certain other hot topics in the municipal securities market. Although this event was rescheduled from its original planned date of March 10, it seems like today is a very appropriate and particularly important moment in time for us to gather and discuss secondary market disclosure practices in light of the impact COVID-19 has had on the municipal securities market generally, and the financial and operating status of municipal issuers individually.

Our goals today are to: (1) gather information about disclosure practices in the secondary market; (2) discuss what, if any, changes in disclosure practices are needed to meet the needs of investors; and (3) consider whether there are any opportunities for regulatory improvements to facilitate such changes in disclosure practice.

Before we start, a few brief thoughts to guide our discussion:

A Collaborative Approach to Improving Secondary Market Transparency and Efficiency

Keeping in spirit with our last municipal securities disclosure conference, SEC staff will only be serving as panel moderators today because we want to hear from you – the participants in the municipal securities market. Although we have organized today’s conference into remarks and three separate panels, I hope you will see how each of these segments interrelates. With that in mind, part of our job today, as the panel moderators, is to help make those connections for you. For example, after listening to the first two panels of the day, we will all have a better understanding of what types of information investors seek in order to make informed investment decisions and the efforts the issuer panelists make to provide it. A foundational question to consider is: are there efficient paths forward to meeting the needs of investors while balancing the cost and burdens associated with producing additional disclosure on the diverse array of municipal issuers? For example, many issuers already produce financial reports for governance purposes or to satisfy the requirements of a private lender. Would public bondholders also find these reports useful in valuing their investments and deciding whether to buy, hold or sell? Can these be made directly available to investors?

Throughout the day, we will also hear discussions of the Staff Legal Bulletin issued by the Office of Municipal Securities in February[2] and the joint statement that Chairman Clayton and I issued in May on the effects of COVID-19 on the financial status of state and local governments and other issuers in the municipal securities market and the importance of providing investors current financial and other disclosures.[3]

The bulletin summarizes the staff’s views on the application of the antifraud provisions to statements made by municipal issuers in the secondary market, and was issued, among other things, to encourage issuers to provide investors more information. One topic of focus in the bulletin was the importance of the “total mix” of information available to investors and the impact a statement or omission may have on that total mix when assessing its materiality for purposes of the antifraud liability under the federal securities laws. As an issuer, you control the flow of information that comprises that total mix and you can influence where investors go to find current information about you and your municipal securities by making more information specifically available for them.

The statement highlights the importance of providing investors with high quality information on their current financial and operating status, particularly in times of uncertainty, and notes that, in today’s markets, the typical practice of providing historic financial information may not enable investors to make informed assessments of the municipal issuer’s current and expected future financial condition. It also encourages municipal issuers to provide forward-looking information regarding the potential future impact of COVID-19 on their financial and operating conditions. At the same time, it also recognizes the challenges associated with providing voluntary, unaudited and non-routine disclosure.

As you listen to today’s discussions, I ask that you consider what, if any, changes in disclosure practices are needed to meet the needs of investors for timely and current information on the one hands and recognize diversity among the issuer population on the other hand and whether there are any opportunities for regulatory improvements to facilitate such changes in disclosure practice. I invite your feedback both today and in the future on this critically important question.

FIMSAC Recommendations

I’d like to now take a few moments to discuss a couple of recommendations made by the Commission’s Fixed Income Market Structure Advisory Committee (FIMSAC) at its February 10 meeting.

First, the FIMSAC made a recommendation that the Commission explore ways through which it could make disclosure deadlines for annual financial information and audited financial statements more certain. As you know, when an offering of municipal securities is subject to the Commission’s Municipal Securities Disclosure Rule, Rule 15c2-12, the underwriter must reasonably determine that the issuer or obligated person has entered into an undertaking to provide annual financial information and certain event notices so long as the securities are outstanding. Related to that requirement, is a requirement that the undertaking “specify the date on which annual financial information for the preceding fiscal year will be provided.”

It has come to our attention that when the undertaking does not include a date certain, but instead specified a number of days or ties the provision of this information to the occurrence of a particular event – it can create uncertainty. Uncertainty regarding when the information will actually be provided and uncertainty regarding whether a municipal issuer or obligated person has complied with their undertaking. We have heard from both investors and the municipal issuer community that this information is important and that we should not be focused solely on how long it takes for this information to be provided but also on whether or not the issuer has complied with its contractual undertaking made for the benefit of bondholders. We invite your feedback on this issue and possible approaches to address the concerns raised.

The FIMSAC also recognized on the one hand that there are concerns about disclosure in the municipal market by many market professionals, but that on the other hand substantial changes to disclosure requirements could have a significant impact on municipal issuers’ ability to raise capital in the public market and could also impact investors. With that balance in mind, the FIMSAC recommended that the Commission seek wide ranging public comment about these concerns and the potential need for the SEC to establish a disclosure framework including timeframe obligations for issuers. We invite your feedback on this very important issue.


It is our job at the Commission to follow developments in the municipal securities market and evaluate whether our regulatory framework remains in step. Very importantly, that work is informed by the feedback we receive from you. I very much look forward to the panels today and the discussions of municipal securities disclosure.

[1] The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission, the Commissioners, or other members of the staff.

[2] See “Application of Antifraud Provisions to Public Statements of Issuers and Obligated Person of Municipal Securities in the Secondary Market: Staff Legal Bulleting No. 21” (February 7, 2020) available at The bulletin represents the views of the staff of the Office of Municipal Securities. It is not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved its content. The bulletin, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

[3] See Chairman Jay Clayton and Rebecca Olsen, Director, Office of Municipal Securities, The Effects of COVID-19 Have Raised Uncertainties Regarding the Financial Status of State and Local Governments and Special Purpose Entities; Municipal Securities Issuers are Encouraged to Provide Updated Financial and Other Disclosures; Financial Professionals are Encouraged to Discuss These Matters With Main Street Investors (May 4, 2020), available at

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