14 issuer released pursuant to Section 6(a), below, of this Work Paper. Explanation of Section 5: 1. In addition to changes in items of information disclosed in such 2. If the last official statement of the issuer was not prepared pursuant to the appropriate sections of the Disclosure Guidelines for Offerings of Securities by State and Local Governments, the response to this Section 5 should include the information suggested for disclosure in the appropriate sections of such Guidelines to the extent such information was not presented in such official statement or has not otherwise been released pursuant to this Work Paper. SECTION 6. INFORMATION FOR RELEASE ON OTHER THAN AN ANNUAL BASIS. (a) Release should be made of each official statement for an offering of securities of the issuer containing information substantially more current than that contained in the last official statement for an offer ing. The official statement should be prepared pursuant to the Disclosure Guidelines for Offerings of Securities by State and Local Governments. Information regarding a fiscal year not covered in any such prior official statement should be regarded as "substantially more current", as should other information materially differing from information previously reported in such a prior official statement. Release of each official statement should be made in the manner suggested in General Instructions E and F of this Work Paper. (b) Release should be made as promptly as possible of information concerning any material development about the issuer or an enterprise not previously released pursuant to this Work Paper or not otherwise receiving adequate public disclosure. Normally, disclosure of the continuation of a prior trend in any item of information without a material change in 15 the direction or rate of change of the trend, should be made pursuant to sections of this Work Paper other than this Section 6(b). However, information concerning any unusually rapid change or the occurrence of any event which can be expected to affect reasonable investment or trad ing decisions should be released as suggested in General Instructions E and F. Due to the breadth of the concept of materiality, as discussed generally in the Appendix, no fully comprehensive list of the types of information which should be released under this Section 6(b) can be given. However, some examples of such information include: (1) The occurrence of a default in any outstanding indebtedness of the issuer, or the issuance of refunding indebtedness to avoid the Occurrence of such a default. This should include a description of the indebtedness and creditors involved, the circumstances leading to the transaction, the relevant provisions of the authorizing and governing instruments, and the amounts of principal, interest and premium involved. (2) The occurrence of a sudden change or disruption in services provided by an issuer or services or products provided by an enterprise. (3) The occurrence of any event described in Section 2 of this Work Paper, except that those events referring to a 5% increase or decrease should be deemed instead for this purpose to refer to a 15% increase or decrease. (4) A severe natural disaster or precipitous economic change materially affecting the issuer's economy. (5) A change in a rating of any outstanding securities of the issuer. 16 APPENDIX The disclosure of information in the securities markets is governed by federal regulations that are designed to protect investors against misleading statements or omissions of important facts. Rule 10b-5 promulgated by the Securities and Exchange Commission under Section 10(b) of the Securities Act of 1934 provides as follows: It shall be unlawful for any person, directly or indirectly, (a) To employ any device, scheme, or artifice to defraud, (c) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. Section 17 (a) of the Securities Act of 1933 contains similar provisions requiring full disclosure. "Full" disclosure for this purpose means disclosure of all information material to investors. The Supreme Court has stated that "material" information includes all information which a reasonable investor might [consider] important in the making of [a] decision." Affiliated Ute Citizens v. United States, 406 U.S. 128, 153-54 (1972) [emphasis added]. The antifraud provisions have been held to protect "speculators and chartists" as well as "conservative" investors. SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968). Consequently, the requirement of full disclosure of material information means a considerable amount of information must be disclosed to prevent liability and to prevent the Municipal Issuers Service Corporation General Managers. Municipal Bond Insurance Association The purpose of this statement is to express the support of Municipal Issuers Service Corporation ("MISC") and Municipal Bond Insurance Association ("MBIA") for the philosophy of S.2969, "The Municipal Securities Full Disclosure Act of 1976," and to outline a concern about one section of the bill. In that regard I have a suggestion for an amendment. Municipal Bond Insurance Association MISC is the General Manager and Agent of MBIA which is an association composed of four major insurance companies having combined assets of $5 billion: The AEtna Casualty and Surety Company, St. Paul Fire and Marine Insurance Company, AEtna Insurance Company and United States Fire Insurance Company. MBIA issues insurance policies which unconditionally and irrevocably guarantee the payment of the |