The Securities and Exchange Commission ("SEC") originally adopted Rule 15c2-12 (the "Rule") in 1989, as a means to improve the dissemination of information in connection with primary offerings of municipal securities. The Rule was subject to significant amendment in 1994, as the SEC expanded its scope to cover both primary and secondary market disclosure. Through the 1994 amendments, the SEC implemented a requirement that broker-dealers (called "Participating Underwriters" in the Rule) review the secondary market disclosure practices of the issuer at the time the securities are initially issued.
Subject to certain exempted transactions, the Rule prevents a Participating Underwriter from purchasing or selling municipal securities with an aggregate principal amount of $1,000,000 or more unless they have first reasonably determined that the issuer will provide certain annual information and notice of the occurrence of specific material events and of failures to file required information. To satisfy their obligations under the Rule, Participating Underwriters require that issuers enter into continuing disclosure agreements in connection with new bond issues.
The Rule mandates when disclosure of information is to be made and where such information must be sent. Today, issuers must file information with the nationally recognized municipal securities information repositories ("NRMSIRs") and with the appropriate state information depository ("SID"), if any, either directly or through an agent. As detailed below, this practice will change significantly in a few months.