**Updated Due to SEC Extension Released at 10AM ET August 1, 2014

Amnesty for Bond Issuer Continuing Disclosure Ending Quickly

On March 10, 2014, the Securities Exchange Commission (the SEC) quietly released an amnesty program to address potentially widespread violations of the federal securities laws by state and local government debt issuers ("Issuers") in connection with continuing disclosure representations connected to bond documents. The amnesty program is ending as of 12:00 AM EST on December 1, 2014. All issuers of state and local governmental debt may need to review the provisions of this program.

Issuers need to read the provisions of the "Municipal Continuing Disclosure Cooperation Initiative" (MCDC Initiative) carefully. If there is a potential problem in compliance with continuing disclosure, the Issuer needs to act quickly by filling out a questionnaire and submitting it to the SEC no later than the deadline on December 1st. You can find these provisions and the questionnaire here.

The Details of the MCDC Initiative

Issuers need to read the initiative carefully and quickly determine if they have made any inaccurate statements in a final official statement regarding prior compliance with continuing disclosure agreements.

Self-Reporting
The website contains a link to a three-page questionnaire that should be filled out carefully (and perhaps with counsel's review) and sent to the SEC before 12:00 AM eastern standard time on December 1, 2014. Even if Issuers have previously been contacted by the SEC, they may want to file under the Initiative as they may be eligible for relief.

What is in the Questionnaire?

The questionnaire includes the following:  

• Identification and contact information
• Information regarding the debt offerings containing the potentially inaccurate statements
• Identities of the lead underwriter, municipal advisor, bond counsel, underwriter's counsel and disclosure counsel, if any, and the primary contact person at the Issuer, for each issue
• Any facts to assist the SEC in understanding the circumstances that may have led to the potentially inaccurate statement(s)
• A statement that the Issuer intends to consent to the applicable settlement terms under the MCDC Initiative

The questionnaires may be e-mailed to the SEC at an address included in the document. They may also be faxed or mailed to the SEC.

Settlements That Could Be Available

As long as the details of the MCDC Initiative are met by the Issuer, the enforcement actions by the SEC could be judged as lenient by most standards. But there are strings attached.

Issuers that are allowed to settle must consent to a cease and desist order. The order will consist of timely filing in the future, among other things. The SEC will then settle allowing the Issuer government to neither admit, nor deny the findings of the SEC. Issuer governments will then consent to change within 180 days including:  

• Establishment of appropriate policies and procedures and training regarding continuing disclosure obligations
• Compliance with existing continuing disclosure undertakings, including updating past delinquent
• Cooperation with any subsequent investigation by the SEC regarding the false statement(s), including the roles of individuals and / or other parties involved
• Clear and conspicuous disclosure of the settlement in any final debt official statements by the Issuer for the next five years from the date of institution of the proceedings
• Certification to the SEC staff regarding the applicable undertakings by the issuer on the one year anniversary of the date of institution of the proceedings

Penalties

No civil penalties will be charged to eligible Issuers that file in the Initiative.

Individuals May Be Liable

Individuals at state and local governments could also be held responsible. Similar terms of settlements and penalties may be offered by the SEC on a case-by-case basis. Therefore, treasurers and other officials who signed the agreements at the Issuer must be part of this process.