SEC Announces Enforcement Cooperation Initiative for Municipal Issuers and Underwriters (with Bondi Comment)

The SEC announced a new cooperation initiative out of its Division of Enforcement ("DOE") to encourage the issuers and underwriters of municipal securities to self-report certain violations of the federal securities laws rather than wait for their violations to be detected.

Under the new initiative titled the Municipalities Continuing Disclosure Cooperation ("MCDC") Initiative, the SEC Enforcement Division will recommend standardized, favorable settlement terms to municipal issuers and underwriters who self-report that they have made inaccurate statements in bond offerings about their prior compliance with continuing disclosure obligations specified in Exchange Act Rule 15c2-12 ("Municipal Securities Disclosure"). For more information about the MCDC Initiative and eligibility for it, see the detailed announcement by the DOE (linked below). Issuers and underwriters can self-report by completing and submitting a questionnaire via e-mail, fax or mail no later than September 10, 2014.

Bondi Comment: The SEC's initiative appears to be rooted in good intentions. Unlike past cooperation initiatives, this program spells out most of the terms in advance. Nonetheless, with a self-reporting deadline of September 10, 2014, issuers and underwriters will not have an opportunity to wait and see precisely how self-reporters are treated.

See: Press Release; Eligibility Requirements; Municipalities Continuing Disclosure Cooperation Initiative Questionnaire for Self-Reporting Entities.