The Dodd-Frank Wall Street Reform and Consumer Protection Act required GAO to review the information issuers of municipal securities must disclose for the benefit of investors. SEC and MSRB provided technical comments, which GAO incorporated, as appropriate. FINRA did not provide comments.
The report addresses:
- The extent to which information currently provided on municipal securities is useful for investors and the extent to which existing regulations reflect principles for effective disclosure, and
- Options for improving the information issuers disclose to investors of municipal securities.
Summary of Findings:
- Market participants indicated that primary market disclosure for municipal securities-official statements-generally provides useful information, but investors and market participants cited a number of limitations to continuing disclosures.
- The most frequently cited limitations were timeliness, frequency, and completeness.
- While GAO’s analysis of current regulatory requirements for municipal securities disclosure found that they largely reflected the seven principles of effective disclosure, regulators and market participants said that there are some limitations on the enforceability and efficiency of the regulations.
- Experts and market participant groups GAO surveyed suggested options for improving disclosure, some of which would require statutory changes while others could be achieved within the existing regulatory framework.
- One suggested statutory change was the repeal of the Tower Amendment, which some experts believed would allow federal regulators to directly require issuers to make disclosures, but SEC and MSRB staff did not agree.
- Other suggestions from experts and market participant groups requiring statutory changes included mandating accounting standards and requiring the submission of financial information at intervals more frequent than annually.
- Experts and market participant groups suggested other options to improve disclosure that could be achieved within the existing regulatory framework, including further improving and promoting MSRB’s Electronic Municipal Market Access (EMMA) system.
The full GAO Report and Summary can be found [here.]
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