SIFMA Calls on State Governments to Improve Municipal Disclosure

SIFMA encouraged states to adopt laws that would require, at a minimum, that local government issuers meet all federal contracting requirements. SIFMA recommended that such laws would require: (i) auditors to check for compliance with continuing disclosure requirements in the context of annual or periodic financial audits, and (ii) local governments to adopt internal policies and procedures related to compliance with all disclosure requirements.

Based on the findings of a 50-state review of local government disclosure, issuance and audit practices, SIFMA asserted that state governments are in a "unique position" to ensure that local governments issuing bonds in the public market make complete and timely disclosure of financial information and comply with all federal contracting requirements.

SIFMA offered a detailed explanation of how continuing disclosure involves the public dissemination of annual financial statements and certain event notices that are material to investors who own or may consider buying bonds issued by governments, authorities, agencies, districts and other public sector issuers. SIFMA emphasized that disclosure is particularly relevant to the municipal securities market, in which over 40% of bonds are held directly by households. SIFMA also encouraged states that already have such processes in place, such as North Carolina, to leverage the existing requirements to ensure compliance disclosure.