Alert April 28, 2010

Are You Meeting Your Continuing Disclosure Obligations?

In 1990, the Securities and Exchange Commission added Rule 15c2-12 to the rules and regulations promulgated under the Securities and Exchange Act of 1934.  In its current form, Rule 15c2-12 prohibits underwriters from purchasing municipal securities unless the issuer and, if applicable, the conduit borrower have agreed in writing to provide periodic financial information and notices of certain specified events, such as defaults and bankruptcies.  Failure to comply with a continuing disclosure obligation constitutes the breach of the underlying contract, for which the damaged party or beneficiary (in this case, the investors) may file an action to compel performance.  In addition, while Rule 15c2-12 does not provide specific consequences for a failure to provide continuing disclosure information, such a failure must be disclosed in connection with any future municipal financing, which could affect the price at which such future securities can be marketed.

Goodwin Procter provides compliance services and expert counsel with respect to continuing disclosure obligations relating to government securities.  We represent all entities with disclosure obligations, including government issuers and private obligated parties.