GFOA Conference Survey Reveals Confusion
About New SEC Disclosure Rules
On July 3,1995, all issuers of municipal debt became
bound by a new, more strict ongoing disclosure standard defined by the Securities and Exchange Commission (SEC) in SEC Rule 15c2-12.
Unfortunately, 71 percent of government finance
practitioners surveyed by Moody's Investors Service
Public Finance Department at the 1995 Government
Finance Officers Association (GFOA) Conference,
think that the new rule goes into effect on January 1,
1996.
Furthermore, results of the five-question survey,
distributed to 527 GFOA conference attendees, revealed that the finance officers haven't focused on the
new rule.
"The survey shows that the overwhelming majority
of government finance officers still need education on
compliance," said Steven Schrager, vice president,
Moody's Public Finance Department.
The survey also showed that 88 percent thought
newly required material event notices would be collected by a government agency, which then would
make the data available to investors. In fact, the SEC
will designate private companies as Nationally Recognized Municipal Securities Information Repositories
(NRMSIRs). Issuers will be required to submit financial
information to all NRMSIRs.
Fifty-eight percent of respondents thought municipalities could be charged a fee for submitting data to a
respository, when, in fact, fees will only be charged to
end users requesting the data.
A majority (65 percent) did understand that the new
rule would not change the relationship between the
issuer and Moody's, since the rating agency already
gathers financial data.
Surprisingly, 60 percent of respondents did realize
that being a small issuer (securities with an aggregate
principal amount less than $1 million) did not completely exempt issues from SEC 15c2-12 requirements.
Moody's Investors Service, a Dun & Bradstreet
Company, is the leading provider of research services
and credit ratings for the debt securities of local governments.
Page 24 / Illinois Municipal Review / August 1995
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