Orrick Partners Discuss SEC’s New Municipalities Continuing Disclosure Cooperation Initiative

Orrick securities litigation and regulatory enforcement partner Elaine Greenberg and public finance senior counsel Robert Feyer discussed the SEC’s Municipalities Continuing Disclosure Cooperation iInitiative (MCDC) initiative for issuers, underwriters, and obligors at a webinar presented by the firm and hosted by The Bond Buyer. The new program is a self-reporting initiative designed to clean the municipal securities market’s slate of any cases where an entity may have holes in the financial reporting requirements it makes to investors.

Ms. Greenberg, a former chief of the SEC’s Specialized Unit for Municipal Securities and Public Pensions, said that an issuer or underwriter interested in self-reporting has to make its own determination as to whether its disclosure failures were materially misleading.

Robert Feyer noted that the program represents a "carrot and stick" approach by the SEC, offering issuers and underwriters the promise of reduced penalties if they cooperate, but the threat of an enforcement action with no mercy if they do not self-report disclosure failures and are later caught. "If you find a lapse, you need to correct it," he said.