SEC Announces Municipalities Continuing Disclosure Cooperation Initiative To Encourage Self-Reporting of Municipal Disclosure Violations

March 12, 2014
Client Alert

On March 10, the Division of Enforcement of the Securities and Exchange Commission announced its Municipalities Continuing Disclosure Cooperation Initiative. The MCDC Initiative provides for self-reporting by issuers and obligated persons of materially inaccurate representations in offering documents (official statements) regarding their compliance with continuing disclosure undertakings under Rule 15c2-12. Lead and sole underwriters may also self-report their failure to confirm the truthfulness of these representations under the MCDC Initiative.

In the SEC’s press release announcing the MCDC Initiative, the Director of the Enforcement Division, Andrew J. Ceresney, stated:

The Enforcement Division is committed to using innovative methods to uncover securities law violations and improve transparency in the municipal markets. We encourage eligible parties to take advantage of the favorable terms we are offering under this initiative. Those who do not self-report and instead decide to take their chances can expect to face increased sanctions for violations.

Under the MCDC Initiative, issuers, obligated persons and underwriters must report disclosure violations by September 10, 2014, and will be subject to standard settlement terms specified in the MCDC Initiative.

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