• MSRB Expands Underwriter Responsibilities: Amendments to Rule G-32
  • February 25, 2011 | Author: John R. Devine
  • Law Firm: Miles & Stockbridge P.C. - Baltimore Office
  • The Municipal Securities Rulemaking Board (“MSRB”) has adopted amendments to Rule G-32 (the “Underwriter Amendments”) that are effective as of February 14, 2011.

    Since June 1, 2009, underwriters have been required to submit certain primary market documents, such as official statements to the public, via the Electronic Municipal Market Access system ("EMMA") under Rule G-32.  The Underwriter Amendments to Rule G-32 (and the corresponding Form G-32) require underwriters of primary offerings of municipal securities to submit to EMMA—as part of their primary offering submission obligation under Rule G-32(b)—certain key items of information relating to continuing disclosure undertakings made by issuers and other obligated persons in connection with those primary offerings.

    The information regarding continuing disclosure undertakings that underwriters must provide through Form G-32 include:

    • whether the issuer or other obligated persons have agreed to undertake to provide continuing disclosure information as contemplated by Securities Exchange Act Rule 15c2-12;

    • the name of any obligated person, other than the issuer of the municipal securities, that has or will undertake, or is otherwise expected to provide, continuing disclosure as identified in the continuing disclosure undertaking; and

    • the timing set forth in the continuing disclosure undertaking, pursuant to Rule 15c2-12(b)(5)(ii)(C) or otherwise, for the submission of annual financial information each year by the issuer and/or any obligated persons to the EMMA system, either as a specific date or as the number of days or months after a specified end date of the issuer’s or obligated person’s fiscal year.

    The name of any obligated person should be the name of the entity that will provide the disclosure—not an individual.  An individual’s name should only be provided if the individual is in fact the obligated person.  With regard to the timing for submission of annual financial information, the underwriter must provide either a specific date in each year by which such information will be provided (e.g., December 31) or the number of days or months after the end of the fiscal year.  In the case of the latter, the actual date on which the fiscal year ends must be provided (e.g., June 30).  If more than one obligated person will be submitting annual financial information by different deadlines, each deadline must be provided and matched to the appropriate issuer and/or obligated person.

    Rule G-32 requires underwriters of primary offerings of municipal securities to initiate the submission of Form G-32 on or prior to the “date of first execution,” which is defined as “the date on which the underwriter executes its first transactions with a customer or another broker, dealer or municipal securities dealer in any security offered in a primary offering....”