94TH CONGRESS 2D SESSION S. 2969 IN THE SENATE OF THE UNITED STATES FEBRUARY 17, 1976 Mr. WILLIAMS (for himself and Mr. TOWER) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing and Urban Affairs 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. 1. Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Municipal Securities Full 4 Disclosure Act of 1976". 5 SEC. 2. (a) Section 3 (a) (12) of the Securities Ex6 change Act of 1934 is amended by inserting "13A," im7 mediately after the phrase "for the purposes of sections". 8 (b) Section 3 (a) (10) of such Act is amended by in9 serting "guarantee of," immediately after "receipt for,". 1 6 (c) Section 12 (h) of such Act is amended by inserting 2 "13A," immediately after "section 13,". 3 (d) Section 15B (d) (1) of such Act is amended by 4 striking out "Neither the Commission nor the Board is" and 5 inserting in lieu thereof "The Board is not", and by striking 6 out "with the Commission or the Board" and inserting in lieu 7 thereof "with the Board". 8 (e) Such Act is further amended by inserting after sec 9 tion 13 the following new section: 10 11 "MUNICIPAL SECURITIES DISCLOSURE "SEC. 13A. (a) (1) Any issuer of municipal securities 12 which has outstanding during any portion of a fiscal year an 13 aggregate principal amount of municipal securities exceeding 14 $50,000,000 shall prepare for such fiscal year an annual re15 port and reports of events of default in accordance with 16 such rules and regulations as the Commission may prescribe 17 as being necessary or appropriate in the public interest or 18 for the protection of investors. 19 "(2) The annual report required by paragraph (1) 20 shall contain the following information, if applicable: 21 22 23 24 25 "(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 the issuer or the taxing authority of the issuer; 1 2 3 4 5 6 7 8 9 10 11 12 234 13 3 "(C) 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, 14 within the past twenty years, a description of the date, 15 16 17 18 19 20 21 22 23 24 25 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 property 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 governmental 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 issuer; and 66 (J) Financial statements of the issuer in such de tail and form and for such periods beginning not earlier 8 9 10 11 12 13 than the fifth previous fiscal year as the Commission 14 15 16 and reported on by an independent public or certified accountant in such manner as the Commission may prescribe. 17 "(3) The reports of events of default referred to in 18 paragraph (1) shall contain such of the information re19 quired by paragraph (2) as the Commission may by 20 rule or regulation prescribe. 21 "(4) The reports required by paragraph (1) shall, in 22 addition, contain such other similar and specific informa23 tion as the Commission may by rule or regulation prescribe 24 as being necessary or appropriate in the public interest or 25 for the protection of investors, 1 5 "(b) (1) Except as provided in subsection (c), any 2 issuer that offers or sells an issue of municipal securities, the 3 aggregate principal amount of which exceeds $5,000,000, 4 to or through a municipal securities broker, municipal secu5 rities dealer, or bank acting as agent, shall, prior to such 6 offer or sale, prepare a distribution statement in accordance 7 with such rules and regulations as the Commission may 8 prescribe as being necessary or appropriate in the public 9 interest or for the protection of investors. 10 "(2) The distribution statement required by paragraph 11 (1) shall contain such of the information pertaining to the 12 issuer required by subsection (a) (2) as the Commission 13 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; 14 15 16 "(B) A description of the security to be offered, including provisions as to security, events of default, payment of principal and interest, sinking fund, redemp tion, 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 of revenue or special assessment securities, and any engineering or |