After months of deliberation, on Aug. 20, the U.S. Securities and Exchange Commission (the SEC) announced its final approval of new amendments (the 2018 Amendments) to Rule 15c2-12, 17 C.F.R. Section 240.15c2-12 (herein, Rule 15c2-12 or the rule). Rule 15c2-12 requires dealers, when underwriting certain types of municipal securities, to ensure that “obligated persons” enter into a written commitment (called a continuing disclosure agreement, or CDA) to make periodic disclosure filings to the Municipal Securities Rulemaking Board (the MSRB). An “obligated person” means any person, including the issuer, that supports the payment of all or part of the obligations on municipal securities to be publicly offered for sale.

The 2018 Amendments created two new categories of events which must be included in the CDA. The two new events added to Rule 15c2-12 are as follows:

  • Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material (Event 15).
  • Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties (Event 16).