U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

Speech by SEC Commissioner:
Statement at SEC Field Hearing on the State of the Municipal Securities Market


Commissioner Elisse B. Walter

U.S. Securities and Exchange Commission

Washington, D.C.
December 7, 2010

Good morning. My name is Elisse Walter, and on behalf of the Chairman, my fellow Commissioners and the staff of the Securities and Exchange Commission ("SEC" or "Commission"), I am delighted to welcome you to our second field hearing on the State of the Municipal Securities Market, this one taking place here at the Commission's headquarters. For those of you watching by webcast, I'd like to extend a virtual welcome as well.


Today's event is one of a series of field hearings across the nation that we launched earlier this fall in order to learn about the current state of the municipal securities market, to hear from interested parties and to gather ideas for potential improvements in this area. We held our first hearing in San Francisco and found it to be extremely helpful. We learned a lot about the topics covered at that hearing — disclosure, ratings, significant liabilities such as pensions, other post-employment benefits and derivatives, internal controls and the investor experience. We anticipate holding additional field hearings in Florida, Texas, Alabama, and Illinois. Each field hearing will include participants from the local region and will focus on some of the issues we are examining. At those hearings, we may revisit some of today's topics and those we addressed in San Francisco, but we will also cover many others, such as: investor education; conduit borrowers; offering participants, professionals and market intermediaries; sales practices; distressed communities; small issuers; 529 Plans; and pricing and quotation issues. With respect to this last topic — pricing and quotation issues — I was very pleased to learn that this will be an area of particular focus in a study of the market and market structure that the MSRB is initiating. I imagine you'll hear a bit more about that study during the Self-Regulation panel this afternoon, but I wanted to make special note of it, as this topic is one in which I have taken a personal interest. I am delighted that the MSRB has decided to review these important issues as it seeks opportunities to improve the quality of the municipal securities market for the benefit of investors.

At the conclusion of all of the hearings, the Commission staff will prepare a report concerning what we have learned, including their recommendations for further action that we should pursue. These may include recommendations for changes in legislation, regulations, and industry practice. These hearings will be instrumental in informing those recommendations.

I was very pleased that our Chairman Mary Schapiro asked me to lead this series of field hearings, as I have long had an interest in strengthening investor protection mechanisms applicable in this important market. Although I — and my colleagues at the Commission — have thought about municipal securities issues for a long time, I look forward to deepening and broadening my knowledge base through this "learning tour," reexamining my opinions and developing new ideas.


Let me introduce you to my colleagues who will be sitting with me at this table during the day. We are fortunate to be joined this morning by Chairman Schapiro. We all owe her a debt of gratitude for placing municipal securities high on the Commission's priority list, and instituting this series of field hearings, which she announced last spring.1

We are also fortunate to have nearly all the Commissioners present this morning. To my right, are my fellow Commissioners Luis Aguilar and Troy Paredes. Commissioner Kathleen Casey is in New York today co-chairing the CPSS-IOSCO Steering Group meeting, but would have loved to have been here. Next to Commissioner Paredes is Robert Cook, the Director of the Division of Trading and Markets and, at the far end of the table is Lori Schock, the Director of the Office of Investor Education and Advocacy. We will also be joined later today by Jim Kroeker, the Commission's Chief Accountant. Not everyone at this table will be able to stay for the full hearing, but some of my colleagues will be with me during each of the panel discussions. Our role will be to listen, learn and engage with the panelists by asking questions. In addition to welcoming you, I remind you, on behalf of myself and all other Commission participants, of the Commission's standard disclaimer — that is — our remarks today represent our own views, and not necessarily those of the Commission, other Commissioners, or members of the staff.2

As the Chairman has noted in the past, to grapple with the complex issues presented by the municipal securities market, we need to harness the ideas of a wide range of people who have experienced this market from many different perspectives3 — which is exactly why we are here today. We have assembled a diverse group of panelists for each of five panels covering topics ranging from market stability and liquidity to the investor experience to self-regulation to accounting and finally, to Build America Bonds ("BABs"). Today's panels will be made up of state and local government officials, municipal securities investors, an academic and experienced municipal market professionals representing the broker-dealer, municipal advisor, muni analyst, institutional investor, bond insurer and auditor perspectives. Thank you all for so generously agreeing to participate — we are sure to have interesting and informative discussions on these important topics.

The moderators of today's panels are two staff members well-known to most of you — Amy Starr, Senior Special Counsel for Capital Markets, Office of the Chief Counsel, Division of Corporation Finance and Martha Haines, Chief of the Office of Municipal Securities, Division of Trading and Markets. My appreciation goes as well to Kayla Gillan, Chairman Schapiro's Deputy Chief of Staff, who is leading this effort for the Commission staff, my counsels Alicia Goldin and Lesli Sheppard who have been indispensable to this effort, and Rachel Hurnyak from Chairman Schapiro's office who has handled the logistics for this hearing and has done a phenomenal job of keeping us all organized.

I would also like to welcome and introduce our fellow regulators who have joined us today: From the Municipal Securities Rulemaking Board ("MSRB"), we have Alan Polsky, a member of the MSRB's Board, and Lynette Hotchkiss (who will be participating in our Self-Regulation panel this afternoon), Hal Johnson and Ernie Lanza from the MSRB Staff. From the Financial Industry Regulatory Authority ("FINRA"), we have Tom Selman (who will also be participating in the Self-Regulation panel), Angela Goelzer, Matthew Shimkus, Malcolm Northam and Cindy Friedlander. The MSRB and FINRA, as you well know, play critical roles in regulating professionals who operate in the municipal market and their assistance has been invaluable. Also attending today's event are colleagues from the Government Accountability Office, which has been tasked with studying various aspects of the municipal securities market pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. And, among those participating as panelists are several highly knowledgeable federal, state and local officials — John J. Cross, III, Associate Tax Legislative Counsel, at the Department of the Treasury, Nancy K. Kopp, Treasurer of the State of Maryland; and Tim Firestine, Chief Administrative Officer of Montgomery County, Maryland.


We have an exciting agenda for today — packed with interesting and timely topics. The format of today's field hearing will entail five panels covering issues relating to market stability and liquidity, the investor experience, self-regulation, accounting and BABs. As moderators, Amy and Martha will introduce their topics and panelists. Each panelist will then make brief opening remarks. Following the opening remarks, the panelists will be asked questions by the moderator and those of us at this table.

We will look to each panel to help us to understand better the particular concerns of different market participants, highlight key areas for improvement, and provide some concrete ideas for moving forward. I hope this will be a comfortable, candid and enlightening discussion, and I encourage the panelists to engage in a dialogue with each other in addition to addressing our questions.

A few housekeeping items before we begin. First, we'd like to ask the panelists, moderators, and other questioners to please stand your nameplate vertically when you would like to speak. Second, there will be a lunch break from 12:00 to 1 p.m. We would ask those of you attending in person to bear in mind the security checkpoint in our lobby, and plan to budget at least 10 minutes upon your return from lunch for that process. Our last panel of the day will conclude by 5:00 p.m. This hearing is being webcast and an archived version will be available on our website. Additionally, a written transcript of today's event will be made available on the Commission's website, as well as any written statements provided by the panelists. Finally, we encourage investors and all other interested parties to submit comments related to the field hearing topics and any other topics related to the municipal securities market to assist the Commission staff in determining whether to recommend changes to laws, regulations, or best practices to better protect municipal securities investors. Comments may be submitted by using the comment form on the SEC website or sending an e-mail to munifieldhearings@sec.gov.

Again, we're so pleased that you are all here today (or watching via webcast) and hope this will prove to be a terrific learning experience for all.

I'll now turn it over to Amy Starr, who will introduce our first panel to you.



Modified: 12/07/2010