Last week, NABL held its conference in Chicago…we recap a few juicy highlights in today’s edition!
Key Highlights this Week!
- SEC: Won’t be Pinned on MCDC – What this means for Issuers – with link to full article!
- IRS and VCAPs: Doubles Number of Settlements in 2015
- Finally – Solving the Compliance Puzzle – Line 10 this week is Requirements!
- Want FREE CPE? Get 3 hours of dedicated Post issuance Compliance training with CPE in November – see inside for details!
So…here goes…today’s Monday Muni Minutes!
Enjoy and have a great week! Deb
CURRENT EVENTS
SEC Won’t be Pinned Down on MCDC Disclosure Violations
At last week’s NABL conference in Chicago, bond lawyers were unsuccessful in getting more clarity around just what might be considered “material” (or not) based on the SEC’s recent $9.3 million enforcement action against 36 underwriters.
Sigh…
In the Bond Buyer article, three key points jumped out at me:
- There is anticipated to be at least one more round of underwriter enforcement actions
- It is also expected that Issuer enforcement actions are forthcoming – as early as 2016
- “Material event” disclosure notices – although not highlighted in the first round of enforcement – could appear in the future
The one statement that really hit home for me…came from SEC chair LeeAnn Gaunt.
“Nobody should take from that fact that we have decided that the failure to file material event notices is absolutely never actionable,” she said. “We’re not setting a floor, we’re not setting a ceiling.”
You can read the full free Bond Buyer article here.
[Editor’s Note: The MCDC continues to rear its ugly head – and does not appear to be going away any time soon – if at all. The SEC cited both King’s Canyon and Allen Park, MI as examples of issuer violations, but refused to draw any “bright lines in the disclosure sand” – despite NABLs best efforts to do so during the panel.]
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.
Check out the “muni deal of the week”…try if for FREE and look 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!)
Cha-Ching! IRS Doubles VCAP Settlements in 2015
VCAP was another hot topic at the NABL Conference…
Talk about BUSY – the IRS expects to close 120 VCAP Settlements in FT 2015 – double the 51 closed in 2014.
To give you an idea – Here’s how the cases break out:
- 34% – change of ownership for 501(c)(3) bonds
- 18% – arbitrage related
- 17% – violations of PBU
- 12% – Private Activity Bond use violations
Two key points that the IRS cited that we should note:
- Only 15% of the VCAP cases currently open have some sort of “procedural review” – i.e. post issuance compliance procedures
- The IRS is terminating the requirement that post issuance compliance procedures be in writing – but they are also eliminating the relief given in VCAP as a result of using those procedures
That second line bears explaining as issuers and bond counsel have already asked if they no longer need to “check the box” on their Form 8038. Many fear they will be audited if they don’t “check the box.”
The IRS’s viewpoint is that they do not want issuers to simply put written policies in place to check the box – and then not use them to actually manage their compliance.
Well, yeah – that makes sense.
Karen Skinder, acting manager of compliance and program management for the TEB said, the forms will be revised, but that it could take a while as changing even one line on a form is “a federal case.”
She also said TEB has “bigger and badder reasons to come out and visit you rather than you didn’t check the box.”
The IRS also said that they will be working harder to close future VCAP cases sooner – with their goal in FY 2016 to be 6 months or less.
[Editor’s Note: We have shared many times in the past that the IRS and SEC will be working to “do more with less” while increasing transparency and accuracy in compliance of tax-exempt bonds. What do you think?]
Back by Popular Demand….
Given the recent settlements by the SEC and focus on “what might be coming next” for issuers, let’s make sure we are all…
Solving the Compliance Puzzle!
I have to say that this is still one of my favorites – I fell in love with this graphic as it so clearly and brilliantly represents the puzzling complexity we are dealing with, as issuers, in meeting our compliance needs.
We also know that both the IRS and SEC are paying much closer attention to it these days – and that it is our obligation as issuers to understand (and have fully complied with) our respective bond covenants.
As part of this effort, each week for ten weeks, we will focus on providing tips, insights and resources for one new line of our compliance puzzle.
So, are you ready?
Today, we’ll wrap up our series with the 10th line of our puzzle – Requirements.
Quick question: How well did you like green vegetables as a kid? If you were like me, not so much, hmmm?
A memory came to my mind when thinking about requirements.
I recall being a youngster, sitting at the dinner table – sullenly, yet defiantly staring at the leafy green enemy on my plate.
Staring at those “poison green things” that I had to eat before I could leave the table. Mom would say “you need to finish them dear – they are good for you”. Dad would just give me that “do as your Mother says” look, nod and go back to reading the paper.
I was doomed…
Yep – I am talking about the dreaded brussel sprouts. It was going to be a long dinner night.
So…how are compliance requirements like brussel sprouts?
I can explain with two taglines…
First, here’s a great tagline which sums up what I think most, if not virtually all of us feel…
“I love sorting out which compliance regs to follow, said nobody, ever.”
(Unified Compliance Framework)
Why would we do it then? Well…simply put – if we don’t…it won’t be healthy for us.
So…to get started, what does requirement mean? I found three closely related definitions…
- Some quality or performance demanded of a person in accordance with certain fixed regulations (I call these “broccoli”)
- A thing that is compulsory; a necessary condition (more like “spinach”)
- Constraints,demands, necessities, needs, or parameters that must be met or satisfied, usually within a certain timeframe. (definitely “brussel sprouts”)
As a kid, eating vegetables may not have been your favorite thing to do. However, the nutrients in them helped you grow up strong, healthy and with the energy to accomplish great things… Thanks Mom!
The same holds true in virtually all aspects of life.
Fulfilling certain requirements leads to success.
Let’s look at a few examples:
- When you apply for a job, you need to have a certain amount of education and experience
- If you want to buy a house, you need to have a certain level of income and down payment
- If you want to win a marathon, you need to have a certain level of physical health and training
Do you think twice about getting the proper levels of education, experience, income or physical training to achieve these goals in your life? 
You probably also realize that each one takes dedication, time and effort.
The same holds true for compliance.
If you want to meet your compliance obligations, you need to understand the requirements, then implement and apply them. It also takes dedication, time and effort.
The second neat tagline, also from Unified Compliance Framework says: Your job is complex and the stakes are high. We’ll make it easier.
In case you were wondering – UCF focuses heavily on IT compliance. In my humble opinion, bond compliance and the changing regulations we deal with rates right up there.
So why is this important?
We also know that both the IRS and SEC are planning on tapping technology and are coordinating the “sharing of data” to help them boost enforcement efforts.
As a municipal bond issuer who is dealing with increasingly complex daily operations, lingering budgetary and staffing pressures…you know your job is complex. Recent scrutiny from the IRS and SEC (or just the thought of it) keeps ratcheting the stakes higher.
That’s why Issuer 2 Issuer is here…
We’ll make it easier. And, maybe even a little fun!
Seriously. Actually, I hope you think we are already making it easier for you…
Over the last year, we have been sharing all kinds of tools, resources and tips in the Monday Muni Minutes – designed for you as an issuer. Articles and tips helped you stay abreast of what’s going on in the muni market as well as tools and resources to help you in specific areas of your compliance program.
Take a quick look back up at the 10 lines in the compliance puzzle – we covered one per week.
You can go back to each week’s Muni Minutes and quickly dig a little deeper into each item by clicking on the numerous green hyperlinks. Again, the puzzle series was designed to give you a 30,000 foot overview of these key areas of compliance.
An interesting thought just hit me as I took that one final look at my (beloved) Puzzle…
The word Compliance is a deep, rich green…not like in broccoli, spinach or brussel sprouts green like today’s story, but more like “in the money” green. Solid, effective compliance DOES save you money (and headache)…so it fits, right?
Either way, whether it’s healthy veggies or being “in the money” – both are really, really good for you.
This concludes our first segment. I hope you found this educational series on Solving the Compliance Puzzle helpful! Stay tuned…
Again, the Monday Muni Minutes is here to provide value to you, as the issuer.
Due to high demand, we created PIC Basics as a free subscriber resource and then PIC Essentials – The Audit-Proven Blueprint to provide practical, hands-on tools you can use.
We have also spoken at local and regional seminars as well as conducted numerous virtual interactive conference sessions…
Next, I’d love to dig deeper into the nuts and bolts of more specific sections of effective compliance programs with you. Are you in?
So…the 64 thousand dollar question is…what would help you the most in reaching your post issuance compliance goals?
Due to the amount of time and effort it takes to research and compile the Muni Minutes content each week, it’s not logical for me to guess what topics and types of resources I think you, as a group, need or want…and in what order.
In order to make the next steps as effective and valuable as possible (for you and for me & the team here) I will be sending currently subscribed members a survey via e-mail – look for it in your inbox tomorrow.
The Monday Muni Minutes PIC Essentials Next Steps Survey should take less than 2 minutes to complete. Please fill out the online survey as soon as you can this week. You can also e-mail me directly if you want to chat about things outside the survey.
Be watching for further details on survey results and “what’s next” in next week’s edition of the Monday Muni Minutes!
Take small bites. For more information or other “requirements” 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 2013 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…
I hope you found this segment helpful!
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.