WASHINGTON -- The SEC staff will probably recommend that the commission finalize its proposed disclosure guidance in the fall rather than repropose it for another round of public comment, municipal bond market participants said after meeting with the SEC staff yesterday.
"The sense that I had is that they want to get it right the first time, and then they want to have a Continuing dialogue with the market to make sure it's working," said R. Fenn Putman, chairman of the Public Securities Association, who was one of several officials representing 10 municipal market groups that met with the Securities and Exchange Commission staff yesterday to air their concerns about disclosure guidance that the SEC issued last March.
The 10 groups, which include the Government Finance Officers Association, had asked the SEC in a joint comment letter last month to repropose the controversial guidance rather than issue it in final form.
The SEC staff officials at yesterday's meeting did not specifically say they planned to finalize the guidance, nor did they indicate when or how it might be revised, the market participants said.
At the same time, however, they indicated they wanted to move forward with the guidance and that they wanted it to be both meaningful for investors but workable for issuers and other market participants. said Putman, a managing director at Lehman Brothers in New York City.
"They want to be helpful to the investor, but they also don't want to cripple the marketplace," he said.
The SEC in March proposed amendments to Rule 15c2-12 of the Securities Exchange Act of 1934 that would bar dealers from purchasing or selling bonds unless the issuer had pledged in writing to provide financial information and notices of material events to a nationally recognized repository.
The proposed amendments would also prohibit dealers from recommending bonds to investors in the secondary market unless they had reviewed the issuers' financial statements.
In addition, the SEC published a legal interpretation of issuers' disclosure obligations under the federal antifraud statutes. That guidance is already effective, but has been the subject of much discussion and comment by bond market participants.