U.S. Securities and Exchange Commission Changes to Rule 15c2-12

Mar 5, 2019

U.S. Securities and Exchange Commission Changes to Rule 15c1-12Download

On August 20, 2018, the Securities and Exchange Commission (the “SEC”) adopted amendments (the “Rule Amendments”) to Rule 15c2-12 (the “Rule”) under the Securities and Exchange Act of 1934.  The Rule requires brokers, dealers, and municipal securities dealers that are acting as underwriters in primary offerings of municipal securities to reasonably determine that the issuer or obligated person with respect to such municipal securities has agreed to provide to the Municipal Securities Rule Making Board’s Electronic Municipal Market Access System website (“EMMA”) timely notice of certain events.  The Rule Amendments add two new events to the list of reportable events which issuers or obligated periods must provide notice of within 10 days of their occurrence.  The two new events are:

  • incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material; and
  • default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the issuer or obligated person, any of which reflect financial difficulties.

The Rule Amendments define “financial obligation” as “…a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii).”  The definition of “financial obligation” explicitly excludes bonds for which a Final Official Statement is furnished to EMMA.  The compliance date for issuers/obligated persons is February 27, 2019.  The Rule Amendments will apply only to continuing disclosure agreement entered into after the compliance date and will not apply to those entered into before the compliance date.   

For more information on this topic, please contact:

Dennis Otten at 317.684.5154 or dotten@boselaw.com; or

Jacob McClellan at 317.684.5154 or jmcclellan@boselaw.com