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State Bond Commission completes annual disclosure training on investor disclosure rules
Summary
The commission received its required annual disclosure training from state disclosure counsel and staff covering primary and continuing disclosure, SEC Rule 10b-5, and use of EMMA for public reporting.
The State Bond Commission on Feb. 20 conducted its required annual training on disclosure policy and practice, led by Foley Udell attorneys and the commission’s disclosure compliance officer, Jessica Munoz. The training was presented under the commission’s disclosure policy adopted in October 2022 and reviewed primary-market and continuing disclosure obligations, the state’s Parts 1 and 2 process for official statements, and requirements on listed events and ongoing investor notices.
Tiffany Trosclair of Foley Udell, identified in the meeting as the state’s disclosure counsel, described disclosure as information provided to investors in official statements and continuing disclosures and said the documents are material information used by investors when deciding whether to purchase bonds. She noted the official statement is comprised of the transaction-specific body, Part 1 (state-specific information) and Part 2 (general financial and debt information) and that annual financial information is posted to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) repository.
Attorneys also reviewed Rule 10b-5’s requirement not to make an untrue statement of material fact or omit a material fact in the market and summarized the series of 16 listed events that require notice under continuing-disclosure undertakings; speakers emphasized that certain obligations (for example, material long-term leases) can constitute incurrence of a financial obligation that must be disclosed.
Presenters encouraged staff to use EMMA and the state’s issuer homepage to post official statements, continuing disclosures and voluntary notices so the market has equal access to information. The presentation included examples of voluntary disclosure during COVID and an IRS audit that had been posted to keep investors informed.
Meredith Hathorn (Foley Udell) and Jessica Munoz (State Bond Commission disclosure compliance officer) described the disclosure working group and the sign-off certificates required from department secretaries that provide assurance to the treasurer about the completeness of Parts 1 and 2. Presenters said members’ offices and staff are available for follow-up questions and flagged that staff have been very responsive during a busy schedule of back-to-back bond issues.
Direct quotes from the presentation included Trosclair’s lighthearted aside about the factual standard, “just the facts, ma’am,” used to emphasize materiality and factual completeness, and Roger Husser’s comments in a different agenda item that “there doesn't appear to be any issue at all” regarding the specific reimbursement question raised in public comment.
