Key Highlights this Week!
- NABL to SEC: Issuer Education Needed after MCDC – recommendations and next steps
- IRS Blasted on Total Return Swaps – full article link
- Changes to Law Could Hurt SEC Enforcement Efforts – full article link
- Wayne County Jail Bonds Get Targeted IRS Audit – full article link
- MSRB Proposes Changes to Rule G-15 and Dealer Markups – full article link
- Want FREE “Best Practices” CPE? Get 3 hours of dedicated Post Issuance Compliance training with CPE in November – registration details and link inside!
- Next Steps Survey – the results are in…
So…here goes…today’s Monday Muni Minutes!
Enjoy and have a great week! Deb
CURRENT EVENTS
NABL to SEC: Issuers Need More Education Post-MCDC
Education, Moderation, Consistency, Communication and Cost-Benefit…what do these all have in common? They are all terms used to describe what NABL says is needed to help issuers do a better job on their continuing disclosure – and that the SEC can – though its guidance – lead the way.
In the Bond Buyer last week, this article highlighted several key points from the NABL letter Allen Robertson of Robinson, Bradshaw & Hinton drafted to the SEC, which are coming out of the industry “post mortems”…
Here’s the good, bad and the ugly.
Education – This is the “heavy lift” to ensuring effective continuing disclosure.
Robertson said,”that fundamentally is the challenge in a lay-person driven system, to figure out how we’ve helped to educate those folks and make sure they are equipped to carry it all out.”
Absolutely this is a key. One of the largest points in the Pic Essentials Next Steps Survey dealt with education – as well as the timing and quality of training.
Moderation – have the SEC act as a facilitator for industry groups and provide guidance. One point specifically mentioned was material events disclosure on ratings changes.
This was a stinging gotcha for many issuers – me included.
Namely, the suggestion is this – if a rating agency provides its ratings on EMMA, then the issuer would not need to file a separate notice on a rating change too. I think this is a great idea – reducing redundancy saves money, time and makes for a less cluttered EMMA repository.
Consistency – this ties in education and expectations. Having consistent data that issuers will understand how to produce, in what 
format and when. This also speaks to using EMMA to set ticklers on reporting due dates along with your internal compliance calendar.
We also know that underwriters have really stepped up their focus – and rightfully so. After all, the MCDC’s purpose was to assure underwriters looked seriously at their own due diligence processes and procedures. I think it’s safe to say “Mission Accomplished.”
Here was a really interesting point that bears consideration…
It had to do with taking steps to review and amend “burdensome and antiquated” continuing disclosure requirements to streamline requirements.
Show of hands…how many of you have struggled with some really challenging disclosure steps for some of your older bonds – perhaps from outstanding capital appreciation bonds that may have been issued years and years ago?
Communication – this was another big one. Interestingly enough, there were considerably more issuers than expected who were not even aware that the MCDC was going on.
Now, these were primarily infrequent issuers, but, in a market with more than 44,000 participants holding $3.6 trillion in outstanding debt, it is something that needs to be addressed.
Cost-Benefit – This is one that we all struggled with- issuers and underwriters alike.
As nearly 79% of issuers underwent either an internal, external or combination review of their records – it was costly. While the range varied from hundreds to tens of thousands of dollars, there was also the time and effort factor.
While NABL encouraged the SEC “to do a pretty rigorous cost-benefit analysis before launching another initiative,” my suspicion is the cost for industry compliance may run a very distant second to the SEC’s mission of protecting investors by assuring timely, transparent and accurate disclosure.
With that said, I believe that awareness, cooperation, sharing of information and best practices will really help issuers and regulators both meet their compliance goals and provide for a more efficient municipal marketplace.
[Editor’s Note: This article was very timely with the Issuer 2 Issuer member “PIC Essentials – What’s Next” survey. See below for more details. Also, if you are in AZ or can attend, there will be a dynamic “Post Issuance Compliance Best Practices” seminar on November 16th…and best of all, it’s free and you get 3 hours of CPE!]
OUT & ABOUT
Conferences:
There are about 30 conferences and regional events for the second half of 2015…
You can go to this Bond Buyer link to review what’s coming up and register!
Resources:
Download NABL’s “Crafting Disclosure Policies” Report
IRS Interim Guidance on BABs and Other Direct-Pay Bonds
IRS 39-Page Memo TE/GE-04-0715-0019
See the full article in the August 3rd Edition of the Muni Minutes!
Replay: Webinar: MCDC – What Comes Next for Muni Underwriters
By: DIVER by Lumesis and hosted by the Bond Buyer
IT was AWESOME! In case you missed it…
Here is the replay link and the slides.
Munivestor.com
Track, search, analyze and keep up on critical bond news – looking at it from the bondholder’s perspective.
On-Demand Post Issuance Compliance Training for Issuers
“Compliance Basics” – a FREE, 3-part video Compliance Framework training, plus the Monday Muni Minutes.
Just Released – with a valuable and amazingly cost-effective “team learning” option!
NEW In-Depth Training, PIC Essentials: The Audit-Proven Blueprint – covering, The IDR – Form 4564, Project Accounting Boot Camp and our hot-button friend, PBU!
On-Demand Webinar
Resource: On Demand Replay of Continuing Disclosure after MCDC
Slides: Final Slide Deck for Continuing Disclosure after MCDC
Muni Market Minute Updates
(Quick news bits on topics we’ve covered in earlier MMM editions!)
A quick note: While my shoulder is recovering over the next couple of months, items of interest here will be shorter and, if allowable, links to the full article will be provided for more detailed information.
IRS Chief Counsel Blasted for Favorable Ruling on Total Return Swaps 
In this rather feisty article, former IRS official, Mark Scott requests the agency revoke a private letter ruling which he described as a mistake and a “scheme.”
“The ruling, therefore, describes an arbitrage scheme that is quite easy to abuse,” Scott said. “The scheme has been abused using billions of dollars of bonds, and has resulted in millions of dollars of illegal tax benefits being stolen.”
You can read the full open Bond Buyer article here.
MSRB Dealers Would Have to Disclose Markups on Principal Transactions
In their first proposed change to MSRB Rule G-15 in more than 20 years, it looks like dealers buying or selling bonds for its own account would be required to update disclosure information to investors…
Lynnette Kelly, the MSRB’s executive director, said the disclosure requirements would provide investors “a way to understand the true costs of their municipal securities transactions.”
Both BDA and SIFMA are expected to provide comments by November 20th. You can read the full open Bond Buyer article here.
SEC Enforcement director Warns Bill Would Hurt Division’s Programs
Andrew Ceresney, the SEC’s top cop, says a bill to update the Electronic Communications Privacy Act of 1986 could have 
far-reaching and potentially damaging effects on the SEC’s ability to gather the evidence in fraud cases…
He said the changes, “poses significant risks to the American public by impeding the ability of the SEC and other civil law enforcement agencies to investigate and uncover financial fraud and other unlawful conduct.”
You can read the full open Bond Buyer article here.
IRS Conducting Targeted Audit of Troubled Wayne County Jail Bonds
In addition to paying $14 million per year on the jail that could not be completed, Wayne County is now being audited on $200 
million of Recovery Zone Economic Development Bonds used to finance the facility in 2011.
You can read the full open Bond Buyer article here.
[Editor’s Note: There were lots of neat open article topics this week in the Bond Buyer – with full links above – enjoy!]
Due to high demand, we created PIC Basics as a free subscriber resource and then PIC Essentials – The Audit-Proven Blueprint to provide practical, hand’s-on tools you can use.
We have also spoken at local and regional seminars as well as conducted numerous virtual interactive conference sessions… and I promised you a Next Steps survey…
And here are the results of the Next Steps survey!
First, thank you to everyone who participated! We really appreciated your thoughtful comments and the obvious desire for practical compliance information you can use.
So, here are the big take-aways
- 67% are local municipalities
- 100% work with bond counsel, FAs and compliance consultants for artitrage rebate, EMMA, etc
- 85% have Govt Purpose Bonds
- 67% have private placement and special revenue bonds
- 35% have variable rate debt
- Only 13% have swaps or other enhancements
- 33% are planning to be in the market in 12 months
- Another 33% are in the market right now
- 50% have a compliance program in place but it needs updated
- 25% do not have any compliance program in place
- The 3 biggest frustrations are
- Policies and Procedures
- IRS or SEC Examination fear
- Succession planning and streamlining (tied)
- 67% said Online Video was the most realistic training platform – with CPE as an option
- 83% want Quarterly trainings
- 100% said that you were interested in quality training, but that time and resources are constrained
- 80% said your programs would be more effective if you had better direction and guidelines from the agencies (IRS and SEC)
This is consistent with what we heard late last year. Getting qualified for CPE credits takes a little time and costs about $1,000 per year to maintain through NASBA unless we partner with someone. If there is enough interest to make it cost effective, we’ll see how we can make that happen for you.
So, we will start working on a quarterly training to address your three biggest fears – and I am working with a couple of professionals who may join me in the sessions as well.
Stay tuned for more information in the next couple of weeks!
In the meantime…
Remember: Take small bites. For more information or other resources, check out our Knowledge Library. You can also ask a question 
in the comments section or reach out to us privately via e-mail and we’ll do our best to help.
You are welcome to download my nationally published AFP article, “A Taxing Dilemma.” In it, I share how we, as issuers, can systematically do a better job of understanding and managing our compliance programs. I think you will see strong similarities in what I experienced and what the IRS and SEC are focusing on…
Want FREE dedicated Post Issuance Compliance CPE?
If you or fellow issuer friends are going to be in the Phoenix, AZ area on November 16th, there will be a FREE 3 hour CPE-eligible post issuance compliance best practices training seminar – with a complimentary networking reception following the training! And yes, I will be one of the five expert guest panelists!
Here is the downloadable flyer and registration link!
We hope you found this week’s edition of the Monday Muni Minutes valuable and informative.
We really do look forward to your feedback – and to provide the best content possible.
Have a GREAT week!
In closing, we are so excited that PIC Essentials: the Audit-Proven Blueprint is now available! A special welcome to members who joined us. We look forward to your comments, questions and chatting with you in the Private Facebook Group – Club PIC!
NOTE: You can still join the learning group here: PIC Essentials: the Audit-Proven Blueprint.
Plus, as we believe so strongly in the team approach to success, we are offering a tremendous “team discount,” where you and four additional compliance members within your agency or company can join the series right along with you…for only $70 more!
We hope you found this week’s edition of the Monday Muni Minutes valuable and informative.
Chat soon!
As always, your comments are welcome…scroll down and let us know what you think about any of the articles!
To your compliance success,
Debbie
The greatest compliment you can pay us is to share this newsletter with your issuer friends….
P.S. Enjoy reading the Monday Muni Minutes each week? Invite your issuer friends to join us on Issuer 2 Issuer so they can get their free online training, PIC Basics! They will also get the Monday Muni Minutes delivered directly to their inbox as well as receive a special “new member” discount offer on the PIC Essentials training!
P.P.S. PIC Essentials: the Audit-Proven Blueprint is now available! You can sign up for the informative, on-demand webinar series by clicking above! Read about the “Team Discount” above! It’s truly a great deal.
P.P.S. Want a one-click way to get faster information? If you are on LinkedIn, you can get access to breaking muni news articles as well as interesting compliance tips and resources, posted by us during the week. Join our private LinkedIn Group Page, and follow us on our Company Page.