The Municipal Securities Rulemaking Board (MSRB) published an advisory on September 13 highlighting to municipal issuers, dealers and municipal advisors the importance of disclosing material information "fairly, equitably and in the public domain." The MSRB is concerned that "selective disclosure" creates an information imbalance favoring a limited group of bondholders, such as investment banking firms, investment advisors or institutional investors, who are given access to material information that others do not have. Selective disclosure can occur:
The MSRB advises that issuers make it a practice to consider whether material nonpublic information has been shared and to take steps to ensure any such information is made available to the general public promptly.
Selective disclosure, while not unique to the municipal market, is specifically prohibited in the corporate market under Securities and Exchange Commission Regulation Fair Disclosure (FD). Municipal issuers are not subject to Regulation FD, but the MSRB's advisory cautions about the potential for federal fraud liability if, for example, known material information is omitted from required public disclosures. Further, if an investor were to make a trade based on improperly disclosed material nonpublic information, that could constitute insider trading.
The MSRB stressed that along with issuers, dealers (acting as underwriters) and municipal advisors may incur liability for selective disclosure under anti-fraud provisions and MSRB Rule G-17, which requires that dealers and municipal advisors deal fairly with all persons and prohibits them from engaging in any deceptive, dishonest or unfair practice.
The MSRB noted that it is a common practice in the case of road shows and investor conferences for an attorney to review the oral script and distributed materials to be certain all the information is included in the disclosure documents available to the general market.
For your convenience, the advisory can be found here.
On September 24, Day Pitney attorneys Judith Blank, Douglas Gillette, Glenn Rybacki and Namita Shah gave a presentation at the New England States Government Finance Officers Association (NESGFOA) 71st Annual Fall Conference in Mystic, CT.
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Doug Gillette and Bill Goddard will be featured panelists during the UConn School of Law's Symposium on Municipal Distress on Friday, September 15.
On November 22, Connecticut Governor Dannel P. Malloy announced that he is appointing Jay Nolan to serve as his appointee on the state's recently created Municipal Accountability Review Board.
Doug Gillette was quoted in an article, "Assured Says It's Open to a Hartford Debt Restructuring," published in The Bond Buyer.
Day Pitney LLP has once again been recognized as Connecticut's number one bond counsel firm by volume, serving as bond counsel on issues in Connecticut totaling approximately $1.7 billion in 2016, according to The Bond Buyer, a daily newspaper serving the municipal bond industry.
Day Pitney Press Release
Hartford, Conn., May 26, 2016 - Day Pitney LLP represented the State of Connecticut as lead bond counsel and disclosure counsel in a general obligation refunding bond sale of $501.4 million. The sale resulted in saving of $75.5 million in debt service costs over the life of the refinanced bonds. The Nappier administration has an active debt refunding program which has saved taxpayers $1.1 billion to date.