MSRB Files to Allow Filings of Voluntary Continuing Disclosures to the MSRB's Electronic Municipal Market Access System ("EMMA")

The Municipal Securities Rulemaking Board (the “MSRB”) has filed with the Securities and Exchange Commission (the “SEC”) a proposed rule change to amend the continuing disclosure service of the MSRB’s Electronic Municipal Market Access system (“EMMA”) to accept, and to make publicly available on the Internet, voluntary electronic submissions by issuers, obligated persons and their agents of continuing disclosure documents provided other than in connection with Exchange Act Rule 15c2-12.[1]  The MSRB has requested approval of the proposed rule change on or prior to July 1, 2009.  Comments on the proposed rule change should be submitted to the SEC.[2]

The SEC has previously approved the establishment of the continuing disclosure service of EMMA, which will commence operation on July 1, 2009.[3]  The EMMA continuing disclosure service will receive electronic submissions of, and will make publicly available on the Internet through the EMMA web portal,[4] continuing disclosure documents and related information from issuers, obligated persons and their agents pursuant to continuing disclosure undertakings entered into consistent with Exchange Act Rule 15c2-12  As approved, the EMMA continuing disclosure service will accept submissions of (i) continuing disclosure documents as described in Rule 15c2-12, and (ii) other disclosure documents specified in continuing disclosure undertakings but not specifically described in Rule 15c2-12.

RULE 15c2-12-BASED CONTINUING DISCLOSURES

The continuing disclosure documents specified under Rule 15c2-12, which have previously been approved for acceptance by the EMMA continuing disclosure service and for which specific indexing information is to be provided to EMMA during the submission process for purposes of facilitating access by the public, consist of:

Financial/Operating Data

• annual financial information concerning obligated persons
• audited financial statements for obligated persons if available and if not included in the annual financial information
• notice of failure to provide annual financial information on or before the date specified in the continuing disclosure undertaking

Material Event Notices

• principal and interest payment delinquencies
• non-payment related defaults
• unscheduled draws on debt service reserves reflecting financial difficulties
• unscheduled draws on credit enhancements reflecting financial difficulties
• substitution of credit or liquidity providers or their failure to perform
• adverse tax opinions or events affecting the tax-exempt status of the security
• modifications to rights of security holders
• bond calls
• defeasances
• release, substitution or sale of property securing repayment of the securities
• rating changes

ADDITIONAL CONTINUING DISCLOSURES UNDER CONTINUING DISCLOSURE UNDERTAKINGS

As noted above, other disclosure documents specified in continuing disclosure undertakings but not specifically described in Rule 15c2-12 have also previously been approved for acceptance by the EMMA continuing disclosure service.  This reflects the fact that, for some offerings, issuers or obligated persons have agreed in their existing continuing disclosure undertakings to provide certain additional categories of continuing disclosures.  If the issuer or obligated person has included such a provision in its undertaking and seeks to make a submission of these additional continuing disclosures to the EMMA continuing disclosure service, such submitter must provide specific indexing information to EMMA during the submission process for purposes of facilitating access by the public and may select from among the following categories:[5]

Other Financial/Operating Data Disclosures

• quarterly/monthly financial information
• change in fiscal year/timing of annual disclosure
• change in accounting standard
• other financial/operating data

Other Event-Based Disclosures

• amendment to continuing disclosure undertaking
• change in obligated person
• other event-based disclosures

PROPOSED ADDITIONAL VOLUNTARY CONTINUING DISCLOSURES

The proposed rule change would amend the EMMA continuing disclosure service to accept submissions of, and to make publicly available through the EMMA web portal, additional categories of continuing disclosure documents voluntarily submitted by issuers, obligated persons and their agents (“voluntary continuing disclosure document”).  The proposed rule change would not establish an obligation upon any issuer or obligated person to make a submission of any voluntary continuing disclosure document.  Voluntary continuing disclosure documents would be submitted, processed and disseminated in the same manner as provided with respect to disclosures made to the EMMA continuing disclosure service pursuant to continuing disclosure undertakings entered into consistent with Rule 15c2-12.  In particular, such submissions would be accepted solely in electronic form as portable document format (PDF) files accompanied by appropriate indexing information.

To facilitate organizing the submissions for easier access by the public, the proposed rule change would establish a number of additional categories in connection with voluntary continuing disclosure documents which the EMMA continuing disclosure service will accept and for which specific indexing information is to be provided to EMMA during the submission process.  These categories were derived from a number of sources, including existing investor relations websites of municipal issuers, recommended practices published by the Government Finance Officers Association, recommended best practices published by the National Federation of Municipal Analysts and suggestions from the MSRB’s investor and issuer advisory groups and other industry participants.  These additional categories of voluntary continuing disclosure are as follows:

Other Financial/Operating Data Disclosures

• interim/additional financial information/operating data
• budget
• investment/debt/financial policy
• material provided to rating agency or credit/liquidity provider
• consultant reports

Other Event-Based Disclosures

• notice to investors pursuant to bond documents
• communication from the Internal Revenue Service
• tender offer/secondary market purchases
• bid for auction rate or other securities[6]
• capital or other financing plan
• litigation/enforcement action
• merger/consolidation/reorganization/insolvency/bankruptcy
• change of trustee, tender agent, remarketing agent, or other on-going party
• derivative or other similar transaction

USE OF DISCLOSURE CATEGORIES FOR SUBMISSION AND PUBLIC DISPLAY ON THE EMMA WEB PORTAL

With respect to the submission process through EMMA, the various categories of continuing disclosure as described above will be organized to differentiate between categories of items specified under Rule 15c2-12 (categorized as “Rule 15c2-12 Disclosures”) and additional or voluntary categories not specifically identified under Rule 15c2-12, consisting of both non-Rule 15c2-12 Disclosures submitted as additional disclosure items identified under continuing disclosure undertakings and non-Rule 15c2-12 Disclosures submitted voluntarily from time to time at the election of the issuer or obligated person (together categorized as “Additional/Voluntary Disclosures”).[7]  In most cases, submitters will be able to index a single submitted document into multiple applicable categories, including categories under both Rule 15c2-12 Disclosures and Additional/Voluntary Disclosures. Over time, the MSRB may combine two or more categories, may divide any category into two or more new categories or subcategories, or may form additional categories for purposes of indexing documents submitted in the “other financial/operating data” or “other event-based disclosures” general category as appropriate based on the types of documents received.

The categories of Additional/Voluntary Disclosures are for the convenience of submitters and users of such documents and do not represent the MSRB’s opinion as to the appropriate items of disclosure with respect to any specific municipal security.  The availability of such categories does not imply or create an obligation to make any disclosures, and it will not be uncommon for one or many of the categories to be inapplicable to any particular security.  Further, the nature of the specific documents submitted for a particular category may vary widely. Only those categories for which submissions have been made for a particular security will be displayed on the EMMA web portal page for such security.[8]

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Questions on the proposed rule change may be directed to Margaret C. Henry, Associate General Counsel, Leslie Carey, Associate General Counsel, or Ernesto A. Lanza, General Counsel, at (703) 797-6600.  Written comments on the proposed rule change should be submitted to the SEC.

April 14, 2009

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TEXT OF PROPOSED RULE CHANGE [9]

MUNICIPAL SECURITIES RULEMAKING BOARD
ELECTRONIC MUNICIPAL MARKET ACCESS SYSTEM –
EMMA^®

EMMA CONTINUING DISCLOSURE SERVICE

The EMMA continuing disclosure service, established as a service of EMMA, receives submissions of continuing disclosure documents, together with related indexing information to allow the public to readily identify and access such documents, from issuers, obligated persons and their agents pursuant to continuing disclosure undertakings entered into consistent with Exchange Act Rule 15c2-12, as well as other continuing disclosure documents concerning municipal securities, at no charge to the submitter. Submissions may be made through a choice of an Internet-based electronic submission interface or electronic computer-to-computer streaming connections. The EMMA continuing disclosure service makes continuing disclosures available to the public, at no charge, on the Internet through the EMMA portal. The EMMA continuing disclosure service also makes continuing disclosures available by subscription for a fee.

Submissions to the EMMA Continuing Disclosure Service

Designated Electronic Format for Documents. No change.

Method of Submission. No change.

Timing of Submissions. No change.

Document Types. The EMMA continuing disclosure service accepts submissions from issuers, obligated persons, and their agents of (i) the continuing disclosure documents as described in Rule 15c2-12, and (ii) other continuing disclosure documents concerning municipal securities specified in continuing disclosure undertakings entered into consistent with Rule 15c2-12 but not specifically described in Rule 15c2-12.

The C c ontinuing disclosure documents described in Rule 15c2-12 consist of the following categories of documents, as set forth in Rule 15c2-12:

• annual financial information concerning issuers or other obligated persons as described in paragraph (b)(5)(i)(A) of Rule 15c2-12, or other financial information and operating data provided by issuers or other obligated persons as described in paragraph (d)(2)(ii)(A) of Rule 15c2-12;
• financial statements for issuers or other obligated persons if not included in the annual financial information as described in paragraph (b)(5)(i)(B) of Rule 15c2-12;
• notices of certain events, if material, as described in paragraph (b)(5)(i)(C) of Rule 15c2-12; and
• notices of failures to provide annual financial information on or before the date specified in the written undertaking as described in paragraph (b)(5)(i)(D) of Rule 15c2-12.

Categories of other disclosure documents concerning municipal securities not specifically described in Rule 15c2-12 include:

• other financial or operating data disclosures, including but not limited to quarterly or monthly financial information; interim or additional financial information or operating data; budget documents; investment, debt or financial policies; consultant reports; material provided to rating agencies or credit or liquidity providers; changes in accounting standards, fiscal year or timing of annual disclosure; and other uncategorized financial or operating data; and
• other event-based disclosures, including but not limited to amendments to continuing disclosure undertakings; changes in obligated person; notices to investors pursuant to bond documents; communications from the Internal Revenue Service; tender offer or secondary market purchase notices; notices of bid for auction rate or other securities; capital or other financing plans; litigation or enforcement action documents; documents relating to mergers, consolidations, reorganizations, insolvency or bankruptcy; changes of trustee, tender agent, remarketing agent, or other on-going party; materials relating to derivative or other similar transactions; and other uncategorized event-based disclosures.

The MSRB may combine two or more categories, may divide any category into two or more new categories or subcategories, or may form additional categories for purposes of indexing documents submitted as uncategorized financial/operating data or event-based disclosures, as appropriate, based on the types of documents received.

Information to be Submitted. In connection with documents submitted to the EMMA continuing disclosure service, the submitter shall provide, at the time of submission, information necessary to accurately identify:

• the category of information being provided (such as annual financial information; financial statements; material event notice, including designation of which specific type or types of events; notice of failure to make timely filing of annual  financial information; or other continuing disclosure document concerning municipal securities, identified by category information provided pursuant to a continuing disclosure undertaking);
• in the case of annual financial information, financial statements and other financial information or operating data, the period covered by such documents;
• the issues or specific securities to which such document is related or otherwise material (including CUSIP number, issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon rate);
• the name(s) of the obligated person(s) (if other than the issuer) to which such document applies;
• the name and date of the document; and
• the identity of and contact information for the person submitting the document.

Submitters. No change.

Public Availability of Continuing Disclosure Documents

No change.

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