In a speech, Dave A. Sanchez, Director of the U.S. Securities and Exchange Commission’s Office of Municipal Securities, highlighted investor-protection and market-transparency concerns in the municipal securities market, focusing on the continued use of the title “financial advisor” where “municipal advisor” is the applicable regulatory term, the way continuing disclosure undertakings are drafted and later revisited under Exchange Act Rule 15c2-12, and the potential value of voluntary interim disclosures. On municipal advisor titling and registration, Sanchez said imprecise terminology in requests for proposals or qualifications and offering documents can obscure whether a professional is subject to the municipal advisor regulatory regime. He noted instances, including in public-private partnerships and charter schools, where requested services could constitute municipal advisory activity, yet RFP/Qs were silent on registration or stated it was not required. He encouraged municipal entities and obligated persons to confirm that providers of municipal advisory services are registered with the SEC and the Municipal Securities Rulemaking Board, and to require such registration in RFP/Qs where the work would involve municipal advisory activity. On continuing disclosure, he revisited staff guidance from the 1995 National Association of Bond Lawyers interpretive letter and the flexibility embedded in the 1994 Rule 15c2-12 amendments, while observing that issuers and practitioners report ambiguities and inconsistencies in undertakings that can lead to overlapping, inconsistent, or outdated disclosures. Where undertakings incorporate specific tables from an official statement, he suggested drafting approaches that preserve flexibility, and he underscored that continuing disclosure undertakings are state-law contracts that generally cannot be amended or reshaped unilaterally, with the SEC lacking authority to grant exemptions from those contractual terms. On voluntary disclosure, Sanchez argued that providing information beyond contractual continuing disclosure obligations can help address changing economic conditions and reduce information asymmetries, and pointed to examples such as interim financial reports, risk reports prepared for other governmental purposes, information shared with rating agencies or loan providers, disclosures about aid that materially affects debt service capacity, and non-routine events that could affect repayment. He also addressed liability concerns, recommending meaningful cautionary language for projections or forward-looking statements, including assumptions, known unknowns, and the methodology used to prepare the information, and suggested making voluntary disclosures available where investors typically look, including the MSRB’s EMMA system and issuer websites.
U.S. Securities & Exchange Commission 2025-06-30
U.S. Securities and Exchange Commission municipal securities director warns on municipal advisor labeling and continuing disclosure undertaking amendments under Rule 15c2-12
Dave A. Sanchez, Director of the SEC’s Office of Municipal Securities, discussed investor protection and market transparency in the municipal securities market. He emphasized correct terminology, urging municipal entities to ensure advisors are SEC-registered, and advocated for voluntary interim disclosures with cautionary language to address liability concerns.