By Mr. WILLIAMS (for himself and Mr. ToWER):

S. 2969. A bill to amend the Securities Exchange Act of 1934 to require the preparation of annual reports and distribution statements by issuers of municipal securities, and for other purposes. Referred to the Committee on Banking, Housing and Urban Affairs.

THE MUNICIPAL SECURITIES FULL DISCLOSURE ACT OF 1976

Mr. WILLIAMS. Mr. President, I am today introducing, on behalf of Senator TOWER and myself, a bill to amend the Securities Exchange Act of 1934 to upgrade the quality and uniformity of financial and other information concerning State and local issuers of municipal securities.

Until enactment of the 1975 Securities Acts Amendments, municipal securities the debt obligations of State and local governments were exempted from all but the antifraud provisions of the Federal securities laws. However, the increasing incidence of sharp and illegal practices led Congress in 1975, to subject the municipal securities industrybank and nonbank dealers and underwriters to SEC jurisdiction This action was taken in order to protect unwary investors, and ended 40 years of nonregulation.

Now, in view of the widespread concern over the financial condition of many of our largest cities, and the obvious lack of adequate disclosure and standardized municipal accounting practices, it is clear that the time has come for the Congress to reexamine the validity of the "hands-off" treatment of municipal securities issuers in the primary market.

Since 1933, municipal securities have been expressly exempted from the full disclosure requirements of our securities laws. As a result, municipal securities have been distributed under practices involving far less disclosure and recognition of fundamental investor protections than is the case for corporate issuers.

The reasons for the original exemptions are not well documented in legislative history, but several factors seem to have influenced the 73d Congress when it considered the Securities Act of 1933. First, there were only rare instances of misrepresentation by municipalities. As evidence of this, the House committee report on the Securities Act of 1933 stated that municipal securities were beyond the need of public protection because of the lack of "recurrent demonstrated abuses." The principal reason for the exemption, however, was the concern that the costs of SEC regulation would be passed on to State and local issuers and the belief that investors in

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municipal securities were sophisticated institutions able to look after their own interests.

Forty-three years of municipal finance corroborates the continuing validity of the finding that "recurrent abuses" have not occurred-New York City being atypical and unusual. This is not so however, with respect to the remaining arguments that were so persuasive in 1933.

For example, for many years, it was true that sophisticated Investors-those generally considered to be able to protect themselves and therefore not in need of the statutory protections of the securities laws were the principal purchasers of municipal securities. Until very recently, municipal financing demands were satisfled by commercial banks, high income individuals, and fire and casualty insurance companies.

However, according to Federal Reserve estimates, the commercial banks' share of the new issue market has steadily declined during this decade from 95 percent in 1970 to 32 percent in 1974. Moreover, insurance companies and other financial intermediaries are not likely to increase their holdings substantially to offset the commercial banks' declining market participation.

A corollary of this is that these tax exempt securities are no longer the province of wealthy and institutional investors. An increasingly large proportion of municipal debt has been sold to individuals of small and moderate means. Rising personal incomes and significant increases in municipal bond interest rates and yields have caused a major upsurge in private investor interest the very category of investors intended to receive the protections mandated by our securi

ties laws.

Also, the historical concern that application of the securities laws to State and local issuers would increase costs and otherwise interfere with essential capital raising efforts has been superseded by a potentially far more serious concernthe erosion of investor confidence. Attractive municipal securities may have once been relatively risk free and safe of municipal credit and the financial condition of governmental borrowers, as well as the accuracy with which information is described and disseminated.

New York City has left in its wake serious disruptions and uncertainties. Some State and local governments have not been able to get to the market at all; others have only been able to sell new issues at extraordinarily high interest rates. In some cases, underwriters have declined to bid on issues where they have been unable to satisfy their legal duties to prospective investors. And banks and other institutional investors have greatly reduced their participation in both the

February 17, 1976

primary and secondary markets. The heretofore highly efficient operations of the primary municipal bond markets have been strained as a result.

Finally, Mr. President, the dimensions of this component of our capital markets is vastly different in terms of size than anyone could have predicted in 1933. Between 1950 and 1974 municipal bond volume grew at about a 10 percent annual rate. In recent years, this growth rate has accelerated. During 1972 alone, longterm municipal bond sales-$23 billionwere 3 times greater than in 1960. In 1975, total issuers of both long- and short-term debt securities were approximately $60 billion-16 percent higher than the previous year.

The almost $22.8 billion of total longterm municipal securities issued in 1974 as compared to the approximately $26.4 billion of new corporate securities-including common, preferred stock, and debt issues-which were registered with the SEC during that year, alone justifies a reexamination of the status of State and local issuers under the securities laws.

In 1928, one commentator described municipal reporting in the United States

A jungle through which run only little trails and some of those are little used...

Everyone concedes that some reports are indispensible, but a few consider what the reports should contain, for whom they should be prepared, in what form they should be presented, how they might most advantageously be circulated, how their content and form might be improved.

The general absence of uniform and standardized municipal reporting is of no less concern today. According to a 1974 Report of the Twentieth Century Fund Task Force of Municipal Bond Credit Ratings:

A major problem, admitted by both the rating agencies and others interested in Ascal affairs, is the lack of uniformity in accounting practices and timeliness in the reporting of state and local government statistics. Furthermore, not only do the reports dizer in definitions, detail and quality, but their veracity and accuracy are often neither examined nor guaranteed by an independent audit

The accounting and reporting problem is a deepseated one because the states either pasalvely or actively have created a hodge-podge of practices and requirements.

Sound financial management and fiscal responsibility by State and local officials will not, in my opinion, occur without definite accounting and reporting standards.

Last year, Arthur Andersen & Co., a well-known international accounting firm, published a report entitled "Sound Financial Reporting in the Public Sector: A Prerequisite to Fiscal Responsibility" to encourage public discussion on the need for sound accounting controls and financial reporting in all units within the public sector. Arthur Andersen concluded:

Cities, states and other political subdivisions should be required to publish [... 0nancial statements annually and in connection with the sales of securities to the pubite.

It is somewhat anomalous that major private corporations have audits performed by independent certified public accountants, but municipalities do not.

The need for this basic information by bondholders, prospective investors, the electorate, and by all branches of government is obvious.

Mr. President, each level of government city, State, and Federal-is confronted with an array of problems that cannot go unanswered. These problems are particularly acute for our urban centers; outdated capital facilities, demands for increased services for the poor and the elderly, and obsolete equipment are just a few. Clouds of doubt over the willingness of investors to purchase municipal securities can only interfere with our progress toward long-term solutions of these problems.

It is therefore imperative that all State and local governments, regardless of size and geographic location, join with the executive branch and the Congress to improve and fine-tune the operations of our markets for municipal securities. An essential and significant first step must be improved disclosure to promote investor confidence in the integrity and efficiency of the capital raising system-a system which governmental entities will have to rely upon more heavily in the years ahead.

Mr. President, the public policy underpinning of 43 years of Federal securities regulation has been full and complete disclosure. Full disclosure has worked well both to facilitate investment decisions and to allow for the optimal use of capital among competing sources. Notwithstanding the relative agreement that the "truth in securities" and "investor protection" framework of the Securities Act of 1933 and the Securities Exchange Act of 1934 are conceptually adaptable to public issuers, it must not be overlooked that the reasons for and the provisions of these laws are in large measure unrelated to the characteristics or needs of governmental issuers or the underwriting and offering process for their securities.

First, municipal securities as a class continue to be relatively safe investments-there have been no Penn Centrals or W. T. Grants, and municipal defaults are almost nonexistent.

Second, municipal issuers provide the ultimate safety for their securities through the exercise of the general taxing power.

Third, the political process prior to which an offering is conducted insures "sunshine" via public meetings, periodic elections and other publicity.

Finally, there are important legal distinctions between government and corporate borrowers.

All of these points render the full range of regulation, registration, and reporting under the 1933 and 1934 acts inappropriate. Nor would their application be practicable from an administrative standpoint. Although there are no accurate figures on the number of public instrumentalities issuing securities, estimates range from 20,000 to 100,000. At either extreme, the practical limitations

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on the SEC if the procedures and requirements of full registration and presale review under the 1933 act were to be applied to municipal issuers are clear when viewed in light of the cumulative total of corporate registration statements processed by the SEC from 1935 to 1974 which add up to a mere 47,223.

It may be argued that the requirements of the anti-fraud provisions, which are applicable even to "exempt" securities, are sufficient to require disclosure of all material facts and to permit informed investment decisions. However, investors. in many instances are not receiving substantial disclosures and when they do, they are not standardized. And as I mentioned earlier, the veracity of such financial information is often open to doubt.

I stronlgy believe that what is needed in this area, is an approach that allows for limited SEC authority to develop improved and standardized disclosure but which avoids the formalities, administrative delays and costs of full registration which are inappropriate for municipal bonds. Such an approach must recognize and respect the prerogatives of State and local governments and encourage a more active role by them in assuring investor protection. In a nutshell, these are the views embodied in the bill which I am introducing today. I have discussed these views with the Chairman of the Securities and Exchange Commission, and I am pleased that he is in general agreement.

The Municipal Securities Full Disclosure Act of 1976 is the product of extensive consultations between Chairman Hills and myself and our staffs. Both Senator ToWER and I appreciate the Chairman's willingness to lend the Commission's considerable expertise and experience in navigating through previously unchartered areas of Federal securities regulation and the legal and economic concepts on which those laws and regulations are based.

The bill relies heavily and borrows frequently from longstanding practices and procedures employed by issuers, underwriters and their counsel in marketing municipal securities. Major changes would not be required by this bill. For example, the methods of syndication and distribution would continue to be governed by State law.

However, the bill would require the preparation of annual reports and distribution statements and specify their contents. In this way bondholders and prospective investors would be fully informed of the precise nature and terms of the bonds being offered, as well as various other relevant matters concerning the issuer. But, the bill does not contemplate direct regulation of the issuer through registration, waiting periods of through prefilling of sale documents with the SEC. Even the content of the required disclosures are taken from the "Disclosure Guidelines for Offerings of Securities by State and Local Governments." prepared by the Municipal Finance Officers Association. The streamlined approach of this bill would rely solely upon the antifraud provisions of the Exchange Act in lieu of registration with the SEC.

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APPENDIX C

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I have prepared a detailed explanation of the bill which I request be placed in the RECORD at the conclusion of my remarks. But it may be helpful to summarize the bill's most salient features. Briefly, the bill would amend the Securities Exchange Act of 1934 to require the preparation of annual reports and distribution statements by issuers of municipal securities in the following manner.

First, issuers of municipal securities with an aggregate principal amount of securities outstanding exceeding $50 million would be required to prepare, but not file with the SEC, annual reports. General information to be included in the reports is enumerated and would include financial statements audited and reported on by an independent public or certified accountant as prescribed by the Commission. Although the Commission would have rulemaking authority to require the inclusion of other information in the annual report, the Commission's discretion is limited by carefully drawn statutory language.

Second, the bill would require distribution statements to be prepared by issuers prior to the public offer or sale of an issue of securities exceeding $5.000,000. The contents of the distribution statement are specified and the Commission would be empowered to insure their proper dissemination. It is anticipated that distribution statements would, to the maximum extent possible, incorporate information available in the annual report, although the Commission would have latitude in prescribing additional content. However, these statements would not be filed with the SEC.

Third, the bill would expressly recognize the initiatives some States have taken in closely supervising the marketing of local government bonds and encourage the further development of this pattern. Thus, where the offer or sale of municipal securities has been approved by a State authority, an exemption from the requirements of this bill would be available. Other exemptions are available for issuers satisfying the criteria specified in various sections of the Securities Act of 1933.

Fourth, the Commission would be authorized to establish the accounting standards and practices to be followed in the preparation of financial statements.

Fifth, the bill would authorize the SEC to assure the annual reports and distribution statements required by the bill are made available to investors and others.

Finally, the bill would limit the liability of underwriters of municipal securities in a manner similar to that provided by section 11(e) of the Securities Act of 1933.

Perhaps as important as to what the bill would do is what the bill is not intended to do. For example, it is not intended to draw any regulatory parallels between municipal and corporate securities or their issuers. Unlike the 1933 act, no registration is required nor is there any requirement of prefiling review by the SEC. Underwritings of municipal securities will not, as a result of this bill.

be highly regulated as are corporate securities. This is not practicable or necessary to assure adequate and accurate disclosure of material facts. Instead, the bill specifies mandatory minimum standards of disclosure and limits the SEC's responsibility and authority to administering the new reporting requirements.

Aside from the limited and measured authority conferre. on the Commission, the bill takes congressional notice of traditional State prerogatives by encouraging more active supervision of municipal borrowings at the State level. According to the Twentieth Century Fund Report:

The leading example is the close supervi sion exercised by the Local Government Commission of North Carolina. The Commission approves and centrally sells local bond and note issues. provides financial advisory serv ices in debt management, supervises local government accounting standards, and maintains and publishes local government data, including the advertising of bids and distribution of bond prospectuses.

A recent study indicates that the bonds of North Carolina communities often have higher credit ratings than the bonds of similar communities ; that more bids are received on the average for local government issues; and that the higher ratings and additional bids help to lower interest costs.

State supervision of this kind has served to assure investors that correct procedures have been followed and that data is accurate and reliable. Lower borrowing costs have thus resulted from the underwriters' knowledge of the State's standards and the uniformity of offering procedures.

Mr. President, the absence of uniformity, or governmental supervision and the inadequacy of information creates serious problems in the marketing of municipal securities far different from those faced in the past. Unless Congress acts to facilitate informed investment decisions and to promote sound municipal fiscal practices, essential public services at every level of State and local government may be placed in jeopardy.

The bedrock of efficient capital raising-whether by a company or a cityis investor confidence. This is conspicuously lacking today, posing unacceptably high legal, economic, and social risks for citizens, investors, underwriters, rating agencies, issuers. and for the Federal Government Local governments must be able to borrow at reasonable costs.

In introducing this bill, I recognize that many difficult questions will have to be resolved during the deliberative process. This process begins next week, when the Subcommittee on Securities will hoid 3 days of hearings. As a result, however,

I am confident that the overriding objectives the development of guidelines and disclosure standards which will be accepted by investors and the various governmental, trade, and professional groups concerned with these offeringswill be accomplished.

Mr. President. I ask unanimous consent that the text of the bill and a section-by-section analysis be printed in the RECORD.

There being no objection, the bill and analysis were ordered to be printed in the RECORD, as follows:

February 17, 1976

6. 2909

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That this Act may be cited as the "Municipal Securities Full Disclosure Act of 1976".

Sec. 2. (a) Section 3(a) (12) of the Securities Exchange Act of 1934 is amended by inserting 13A." immediately after the phrase "for the purposes of sections"

(b) Section 3(B) (10) of such Act is amended by inserting "guarantee of." immediately after "receipt for.".

(c) Section 12(h) of such Act is amended by inserting "13A," immediately after "section 13,".

(d) Section 15B (d) (1) of such Act is amended by striking out "Neither the Commission nor the Board is" and inserting in lieu theerof The Board is not". and by striking out "with the Commission or the Board" and inserting in lieu thereof "with the Board".

(e) Such Act is further amended br inserting after section 13 the following new section:

"MUNICIPAL SECURITIES DISCLOSURE "SEC. 13A. (a) (1) Any issuer of municipal securities which has outstanding during any portion of a fiscal year an aggregate principal amount of municipal securities exceed. ing $50.000.000 shall prepare for such fiscal year an annual report and reports of events of default in accordance with such rules and regulations as the Commission may prescribe as being necessary or appropriate in the public interest or for the protection of investors.

(2) The annual report required by paragraph (1) shall contain the following information, if applicable

"(A) An identification and description of the issuer of the securities outstanding;

"(B) A description of any legal limitation on the incurrence of indebtedness by Lne suer or the taxing authority of the issuer;

"IC) A description of the issuer's debt structure, including information with respect to amounts of authorized and outstanding funded debt; estimated amount of short term debt, character of amortization provisions of funded debt, sinking fund requirements, security for debt, nature and extent of guaranteed debt, and debt service requirements;

"(D) A description of the nature and extent of other material contingent liabilities or commitments of the issuer;

"E) If any payment of principal or interest on any security of the issuer or any predecessor thereof has been defaulted on. or has been postponed or delayed, within the past twenty years, a description of the date. Amounts and circumstances of such event and of the terms of any succeeding arrangements thereof;

"(F) A description of the issuer's tax authority and structure over the past five years including the nature of taxes levied tax rates, property (real and personal) valuation and assessment procedures, amounts of prop erty valuations and assessments, amounts of tax levies, amounts of tax collections and delinquent tax procedures and experience: "(G) A description of the issuer's major taxpayers:

"(H) A description of the principal gov ernmental and other services provided or performed by the issuer, the extent to which similar or differing services are performed by other governmental entities which serve the same geographic area and any major changes in such services in the last ten years;

"(I) A description of the nature and extent of Federal or other assistance programs available to the lasuer; and

"(J) Financial statements of the Isauer in such detail and form and for such periods beginning not earlier than the Afta previous

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fiscal year as the Commission may prescribe, which statements for any fiscal year commencing on or after December 31, 1978 shall be audited and reported on by an independent public or certified accountant in such manner as the Commission may prescribe.

(3) The reports of events of default referred to in paragraph (1) shall contain such of the information required by paragraph (2) as the Commission may by rule or regulation prescribe.

"(+) The reports required by paragraph (1) shall, in addition, contain such other similar and specific information as the Commission may by rule or regulation prescribe as being necessary or appropriate in the public interest or for the protection of investors.

(b) (1) Except as provided in subsection (c) any issuer that offers or sells an issue of municipal securities, the aggregate principal amount of which exceeds $5,000,000, to or through · municipal securities broker. municipal securities dealer, or bank acting as agent, shall, prior to such offer or sale, prepare a distribution statement in accordance with such rules and regulations as the Commission may prescribe as being necessary or appropriate in the public interest or the protection of investors.

"(2) The distribution statement required by paragraph (1) shall contain such of the information pertaining to the tasuer required by subsection (a) (2) as the Commission may by rule or regulation prescribe, and the following:

"(A) A description of the offering, including amount to be offered, price, plan of distribution, and underwriting arrangements and compensation;

"(B) A description of the security to be offered, including provisions as to security, events of default, payment of principal and interest, sinking fund, redemption, debt reserve funds, priority, legality and authorization for issue and rights of security holders to bring suit against issuers:

"(C) A description of any project or enterprise of the issuer to be financed from the proceeds revenue or special assessment securities, and any engineering or financial feasibility reports or studies on the construction and operations of the project or enterprise;

"(D) A description of the intended use of the proceeds of the offering.

"(E) A statement of counsel's opinion M to the legality of the issuance ofthe securities to be offered;

"(P) A statement of the availability of the reports required by this section; and "(G) Such other similar and specific information as the Commission may by rules or regulations require as necessary or appropriate in the public interest or for the protection of investors;

except that, prior to any sale, the information specified in subparagraphs (A), (B) and (E) may be set forth in preliminary form. "(e) The provisions of subsection (b) shall not apply to an issuer solely by reason of an offer or sale of municipal securities

"(1) the disclosure with respect to which has been approved, after hearing. as adequate for the protection of investors by a State governmental authority (other than the issuer) expressly authorized by law to grant such approval, or

"(2) which would meet the criteria et forth in sections 3(a) (9), 3(a) (10), 4(1), 4(2), 4(3), or 4(4) of the Securities Act of 1933 if such offer or sale were not within the scope of section 3(a) (2) thereof.

"(d) The Commission may from time to time by its rules and regulations, and subject to such terms and conditions as may be prescribed therein, change the minimum amounts set forth in subsections (a) (1) and (b) (1) if, giving due regard to such factors as general economic conditions, costs involved, and the nature of the distribution system for municipal securities, such change

is deemed to be appropriate in the public interest.

(e) The Commission may prescribe, in regard to reports and distribution statements made pursuant to this section, the form or forms in which the required information, including the financial statements, shall be set forth, and the accounting methods to be followed in the preparation of financial statements.

"(f) (1) The issuer shall make the reports required by subsection (a) (1) of this section available upon request to security holders at the issuer's expense and to others at their expense and shall give appropriate public notice of such availability.

(2) The issuer shall make the distribution statement required by subsection (b) (1) of this section available to municipal securities brokers, municipal securities dealers, and banks acting as agent for delivery to prospective purchasers in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

"(3) The reports and distribution statements required by this section shall also be maintained by the issuer at a designated location for examination by the public in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. The Commission may also contract to establish a central repository which shall receive and maintain such reports, and may require the contractor to adhere to such rules and regula tions as the Commission may prescribe in furtherance of the purposes of this section. Each person subject to the requirements of this section shall, upon the establishment of any such repository, thereafter file coples of reports and distribution statements required to be prepared by this section with the repository in accordance with such rules and regulations as the Commission finds are necessary or appropriate in the public interest.

"(g) In no event shall any underwriter of an issue of municipal securities (unless such underwriter shall have knowingly received from the issuer for acting as an underwriter some beneft, directly or indirectly, in which all other underwriters similarly situated did not share in proportion to their respective interests in the underwriting) be liable in, or as a consequence of, any sult for damages in excess of the total price at which the lasue was sold by it to the public."

Sec. 3. The amendments made by section 2 take effect on January 1, 1977.

SECTION-BY-SECTION ANALYSIS

This bill would amend the Securities Exchange Act of 1934 (the "Act") to provide for limited regulation of municipal securities. Section references are to sections of the bill, otherwise indicated.

Section 1 would provide the short title of the bill, the Municipal Securities Full Dieclosure Act of 1976.

Section 2(a) would amend the definition of "exempted securities" In Section 3 (a) (12) of the Act to provide that municipal securities would not be deemed "exempted securities" for purposes of new Section 13A of the Act.

Section 2(b) would amend the definition of "security" in Section 3(a) (10) of the Act to include a "guarantee" of certain types of securities. Thus, the reporting requirements of new Section 13A of the Act would be specifically applicable to the guarantor of a municipal security. Section 2(1) of the Securities Act of 1933 defines "security" in a similar manner.

Section 2(c) would amend Section 12(h) of the Act to provide the Commission with authority to exempt any municipal issuer or class of municipal issuers from the provisions of new Section 13A of the Act if the Com

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mission finds such action is not inconsistent with the public interest or the protection of investors.

Section 2(d) of the bill would amend Section 15 B(d) (1) of the Act to provide the Commission with authority to require an issuer of municipal securities to comply with applicable disclosure requirements.

Section 2(e) would amend the Act to add new Section 13A to the Act, entitled "Municipal Securities Disclosure" to provide for limited regulation of municipal securities by the Commission and to require the preparation of annual reports and distribution statements by issuers of municipal securities.

Subsection (a) (1) would require a municipal issuer with more than $50,000,000 of municipal securities outstanding during any portion of a fiscal year to prepare for each such fiscal year an annual report and reports of events of default in accordance with the rules and regulations promulgated by the Commission. The Commission would have authority to specify by rule or regulation the period of time within which such reports must be prepared. In addition, the method for computing the amount of municipal securities would be defined by the Commission.

Subsection (a) (2) would set forth, in general categories, the information to be contained in the annual report, including an identification and description of the issuer, as well as information concerning any legal limitations on the debt ceilings of the issuer or the issuers taxing authority; the nature and extent of other material contingent liab uities or commitments of the issuer; the 16suer's tax authority and structure over the past five years; the principal governmental and other services provided or performed by the issuer and the extent to which similar or differing services are performed by other governmental entities serving the same geographic area and any major changes in such services in the last ten years; a description of the nature and extent of federal or other assistance programs available to the issuer and financial statements in such detail and form as the Commission may prescribe. Commencing on or after December 31, 1978, the financial statements shall be audited and reported on by an independent public or certified accountant in the manner prescribed by the Commission.

Subsection (a) (3) woula require that reports of events of default contain such of the information in the annual report as the Commission may, by rule. determine.

Subsection (a) (4) would authorize the Commission with rulemaking authority to require additional information to be included in the annual report and reports of events of default. However, the Commission's discretion would be limited to requiring "simllar and specific information" to that required by new Section 13(a) (2) of the Act.

Subsection (b) (1) would require a municipal securities issuer that offers or sells an Issue of municipal securities of an aggregate principal amount exceeding 85,000,000 to or through a municipal securities broker (defined in section 3(a) (3) of the Act), municipal securities dealer (defined in section 3(a) (30) of the Act) or a bank acting as agent, to prepare a distribution statement prior to the offer or sale in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Subsection (b) (2) would set forth the information to be included in the distribution statement. This information would consist of such of the data required in the annual report of the issuer as the Commission may prescribe, together with specified additional information concerning the particular offering. The Commission would be given flexible authority. If, for example, the issuer had prepared an annual report for the fiscal year preceding the offer or sale of municipal secu