Rule 15C2-12: A Flawed Regulatory Framework Creates Pitfalls for Municipal Issuers

Abstract

Despite the increasing growth and complexity of the municipal bond market, it remains subject to minimal regulation. State regulation is non-uniform, and industry custom requires only voluntary disclosure. Although municipal issuers are subject to the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, they are exempt from the registration and disclosure requirements of the Acts. SEC Rule 15c2-12 and its amendments impose an initial disclosure requirement, periodic disclosure and secondary market reporting. The regulatory framework provided by Rule 15c2-12, however, is insufficient for both issuers and investors. This Article examines the disclosure requirements that issuers face in today's municipal bond market.

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Municipal bonds

1946

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Lisa M. Fairchild (Loyola College in Maryland)

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