California Debt and Investment Advisory Commission

SEC Rule 15c2-12

The Securities and Exchange Commission (SEC) Rule 15c2-12 promulgated under Section 15(c) (2) of the Securities Exchange Act of 1934, contains disclosure and continuing disclosure requirements applicable to municipal securities. Specifically, SEC Rule 15c2-12 requires that underwriters of municipal securities, before bidding, purchasing, or selling a municipal security in the primary market, must obtain and review the issuer’s preliminary and final official statements and reasonably determine that the issuer has committed to provide continuing disclosures to investors.

Generally, this undertaking takes the form of a continuing disclosure certificate or continuing disclosure agreement (CDA) executed by the issuer with respect to the securities, or other obligor, at bond closing. In most cases, the information to be provided subject to a CDA, includes annual financial and operating information of the kind and substance contained in the offering documents, audited financial statements, notice of the occurrence of certain events, and notice of any failure to meet these reporting requirements.

As part of the continuing disclosures to investors, issuers must provide notice of the occurrence of certain material events relating to the outstanding securities that are likely to be of a material interest to bondholders or potential investors within 10 business days of the occurrence of the event. On February 27, 2019, two new events were added to those already identified in SEC Rule 15c2-12.

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