On July 3,1995, all issuers of municipal debt became bound by a new, more strict ongoing disclosure standard defined by the Securities and Exchange Commission (SEC) in SEC Rule 15c2-12.

Unfortunately, 71 percent of government finance practitioners surveyed by Moody's Investors Service Public Finance Department at the 1995 Government Finance Officers Association (GFOA) Conference, think that the new rule goes into effect on January 1, 1996.

Furthermore, results of the five-question survey, distributed to 527 GFOA conference attendees, revealed that the finance officers haven't focused on the new rule.

"The survey shows that the overwhelming majority of government finance officers still need education on compliance," said Steven Schrager, vice president, Moody's Public Finance Department.

The survey also showed that 88 percent thought newly required material event notices would be collected by a government agency, which then would make the data available to investors. In fact, the SEC will designate private companies as Nationally Recognized Municipal Securities Information Repositories (NRMSIRs). Issuers will be required to submit financial information to all NRMSIRs.

Fifty-eight percent of respondents thought municipalities could be charged a fee for submitting data to a respository, when, in fact, fees will only be charged to end users requesting the data.

A majority (65 percent) did understand that the new rule would not change the relationship between the issuer and Moody's, since the rating agency already gathers financial data.

Surprisingly, 60 percent of respondents did realize that being a small issuer (securities with an aggregate principal amount less than $1 million) did not completely exempt issues from SEC 15c2-12 requirements.

Moody's Investors Service, a Dun & Bradstreet Company, is the leading provider of research services and credit ratings for the debt securities of local governments.

Page 24 / Illinois Municipal Review / August 1995