Municipal bond investors will have access to more investment information

The Securities and Exchange Commission has announced that it has unanimously approved measures that will shine more light than ever before on the municipal securities market by tapping the power of the Internet. For the first time, investors will have a free, one-stop way to find municipal bond information online to help them make investment decisions.

The SEC has worked with the Municipal Securities Rulemaking Board (MSRB) to correct a glaring deficiency in the $2.6 trillion municipal market, in which two-thirds of the securities are owned by individual investors. Unlike investors in corporate securities who have direct access to free company information through the SEC's EDGAR system, average investors in municipal securities currently have no free and convenient way to get important information about the municipal bonds in which they invest.

Currently, municipal securities investors who want ongoing disclosure information about a municipal bond – such as annual financial data or a material event like a downgrade or default – first must locate it on their own at one of the four Nationally Recognized Municipal Securities Information Repositories (NRMSIRs). Then once they find a source, investors come to find out that they must pay significant fees to get the information they want, and then may experience considerable delays while waiting for the documents to be delivered to them by mail or fax.

"For the first time, millions of individual investors in municipal bonds will have free and instant access to information about their investments, similar to the way they can obtain information about public companies," said SEC Chairman Christopher Cox. "With liquidity problems of municipal auction rate securities and rating downgrades of municipal bond insurers contributing to the current credit crisis, the disclosure and transparency of the municipal markets have never been more critical. Municipal securities investors need to know what they own. Now they will no longer have to go to such extensive and expensive lengths to find out."

The rule amendments approved by the SEC designate the MSRB as the central repository for ongoing disclosures by municipal issuers. Under a separate MSRB rule change, its Electronic Municipal Market Access (EMMA) system would make these disclosures available to investors in the same manner that the SEC's EDGAR system does for corporate disclosures.

Ronald A. Stack, Chair of the MSRB, said, "This historic action by the SEC will improve the flow of information in the municipal market and enable more informed investors. The MSRB is gratified by the SEC's support for the transparency and accessibility that our EMMA system can provide."

EMMA will operate as a consolidated, online portal where investors can instantly access, for free, all of the key information produced by municipal bond issuers about their bonds. Offering documents, real-time trade prices, and education resources already are available on EMMA.

In order to provide adequate transition time, the SEC's rule amendments and the MSRB's rule change will be effective on July 1, 2009.

You may like these other stories...

Bipartisan Cooperation on Tax Refund FraudAs noted in Politico, Senators Wyden and Hatch have introduced a tax refund fraud bill. According to a summary from Senator Hatch's office, the bill would enhance "the...
There’s a way for investors to brave the world beyond stocks and bonds of a traditional Individual retirement arrangement (IRA) and venture into real estate, tax liens, unregistered securities and so on. Their avenue...
KPMG LLP has agreed to shell out $8.2 million to settle charges from the US Securities and Exchange Commission (SEC), which found that the Big Four firm violated auditor independence rules by providing certain nonaudit...

Already a member? log in here.

Upcoming CPE Webinars

Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.