Commentary: How SEC’s Rule 15c2-12 changes create challenges for municipal market

Stanley Keller, a Senior Partner in Locke Lord’s Boston office, authored an article examining the SEC’s Rule 15c2-12 and the challenges of the rule for the municipal market. Keller points out, “The SEC significantly revised its proposal to address some of the concerns when it recently adopted the amendments to Rule 15c2-12 to add two new events required to be currently reported — (i) incurrence of a material financial obligation, including a debt obligation, and material terms of a financial obligation and (ii) a default or other event under a financial obligation reflecting financial difficulty.” He notes, however, that the rule has created some problems for municipal market participants. Keller states, for example, “The lack of precision in the new Rule 15c2-12 event requirements and the possibility of events having occurred of which the reporting person is unaware or may not consider to have been triggered is likely to make the diligence underwriters will undertake more burdensome and increase the disagreements between underwriters and reporting persons over compliance with disclosure requirements.”

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