Disclosure by Issuers of Municipal Securities: An Analysis of Recent Proposals and a Suggested Approach

The following considerations impacting on the disclosure issue have been developed in this Note: the uniqueness of the municipal securities industry, owing to the diverse natures of the securities, the wide variety of issuers, and the particular means of marketing the securities; the special circumstances created for underwriters by the competitive bidding process; the varied roles of other participants in the distribution process--fiscal agents, bond counsel, governmental accountants; the existing state machinery for regulation and control; the practical limitations on the SEC--both in staff capacity and expertise; the need for uniformity in disclosure to prevent weakened marketability of municipal securities and restrictive bidding by underwriters; and the constraints of sovereign immunity on issuer amenability to suit for violations of disclosure duties. Each of the above affects what course should be taken on the question of disclosure by issuers of municipal securities. The salient considerations are uniqueness, the need for uniformity, notions of federalism,and sovereign immunity.