CONTINUING DISCLOSUREWhat am I continuing to disclose…and who is EMMA?

Ohio GFOA Annual Conference & Membership Meeting

September 21-23, 2016

Jennifer Blaser & Diana Silveira, Dinsmore & Shohl LLP

TABLE OF CONTENTS

1. Continuing Disclosure: SEC Rules

2. Continuing Disclosure Agreements

3. EMMA

4. Compliance Strategy/Best Practices

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SEC Rules History

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SEC Rules

Securities Act of 1933 – passed with the objective of providing investors full disclosure of material facts about securities offered and sold

Securities Exchange Act of 1934 – created the Securities and Exchange Commission (SEC)

» While municipal securities are exempt from the registration and reporting requirements of the Securities Acts, issuers are subject to liability under the anti-fraud provisions of the Securities Acts (principally Rule 10b-5 of the Securities Exchange Act of 1934)

On January 1, 1990, Rule 15(c)2-12 went into effect which required greater access to Official Statements for primary offerings

» While the quality of disclosure for primary offerings significantly improved with the passage of Rule 15(c)2-12, there was a continuing concern with the adequacy of disclosure in the secondary market

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SEC Rules

To address continuing disclosure for

municipal issuers in the secondary market,

the SEC amended Rule 15(c)2-12 on

November 10, 1994

Under the amended rule, broker-dealers are

barred from buying municipal securities

unless the issuer has agreed, in writing, to

provide ongoing disclosure

» This provision is the basis for a required

Continuing Disclosure Agreement (CDA)

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SEC Rule 15(c)2-12

Rule 15(c)2-12: governs primary offering disclosure and continuing

disclosure, including submission of annual financial information and

material event notices

» Primary offering of municipal securities in principal amount of $1

million or more, subject to exceptions

» Directly governs underwriters and indirectly governs issuers and

obligated persons

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Continuing Disclosure

Agreements

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Continuing Disclosure Agreements

Issuer subject to Rule 15(c)2-12 must enter into a continuing

disclosure undertaking

» Continuing Disclosure Agreement

Continuing Disclosure Agreements

» Annual filing date

» Sets forth what needs to be filed:

• Audited financials*

• Selected annual financial/operating data from the Official

Statement (largest taxpayers, tax collection rates, assessed

valuation, etc.)

• Material Event Notices (rating change, late payment, etc.)

*if audit not available by filing date, is to be filed once it becomes available

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Continuing Disclosure Agreements

Not all Continuing Disclosure Agreement are the same

» After current issuance of a security, if have outstanding debt:

• $10,000,000 or more Audited financials plus

financial/operating data

• Less than $10,000,000 only Audited financials

Each debt issuance has its own Continuing Disclosure Agreement

» Example: 3 outstanding bond issues (each subject to 15(c)2-12)

3 Continuing Disclosure Agreements

» Ideally all 3 Continuing Disclosure Agreements have the same

required filing date and are substantially the same in all material

aspects

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Continuing Disclosure Material Events

Material Events

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Events Materiality

Principal and interest payment delinquencies Without regard to materiality

Non-payment related defaults If material

Unscheduled draws on debt service reserves reflecting financial difficulties Without regard to materiality

Unscheduled draws on credit enhancements reflecting financial difficulties Without regard to materiality

Substitution of credit or liquidity providers, or their failure to perform Without regard to materiality

Adverse tax opinions or events affecting the tax-exempt status of the security Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or

final determinations of taxability, notices of Proposed Issue (IRS Form 5701-TEB), or

other material notices or determinations with respect to the tax status of the security

Modifications to rights of security holders If material

Bond calls If material

Defeasances Without regard to materiality

Release, substitution, or sale of property securing repayment of the securities If material

Rating changes Without regard to materiality

Failure to file continuing disclosures by deadline*

Tender offers Without regard to materiality

Bankruptcy, insolvency, receivership or similar event of the obligated person Without regard to materiality

The consummation of a merger, consolidation, or acquisition involving an obligated

person, or the sale of all or substantially all of the assets of the obligated person, other

than in the ordinary course of business, the entry into a definitive agreement to

undertake such an action or the termination of a definitive agreement relating to any

such actions, other than pursuant to its terms

If material

Appointment of a successor or additional trustee or the change of name of a trustee If material

*Does not appear on the list but is a twelfth material event notice requirement in the rule. Source: Securities and Exchange Commission

Continuing Disclosure - Offering Documents

Offering Document/Official Statement

» Must summarize the requirements of the Continuing Disclosure Agreement

» Issuer must disclose if in material compliance with prior continuing disclosure obligations for past 5 yearsExample: Rule 15(c)2-12 (the “Rule”), promulgated by the Securities and Exchange Commission, requires continuing disclosure with respect to new offerings of municipal securities of $1,000,000 or more. The Issuer is obligated to provide such continuing disclosure with respect to one or more previously issued and currently outstanding bond or note issues. The Issuer has been in material compliance with its continuing disclosure obligations for the past 5 years. The audited financial statements of the District are not always available by the annual filing date of October 15; therefore, historically, the Issuer filed all required operating data by the filing date and filed the audited financial statements within thirty days after they became available on the Ohio Auditor of State’s website. The Issuer did not provide notice of an insurer downgrade in 2012 with respect to the Issuer’s Series 2010 Bonds A notice of such insurer downgrade was filed on February 16, 2016.

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EMMA

Continuing Disclosure filings to be made on EMMA

» Electronic Municipal Market Access System

» Home Page: http://emma.msrb.org/

EMMA provides details on each publically offered security including:

» Official Statement

» CUSIP, maturity information, interest rate, principal amounts,

initial offering price and yield

» Continuing disclosure broken into Audited Financials,

Financial/Operating Data, Event Notices

» Trade Activity

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Filing on EMMA

Start on the Home Page: http://emma.msrb.org/

Click “EMMA Dataport” in the top right of the home page

Then Log-In

» Use your User ID and Password

» If you’re new to EMMA, Register

• To register, certain information will be needed about who you

are and who you are filing for

• Someone will need to confirm your information

Once logged in, the Submission Portal will load

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EMMA Submission Portal

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EMMA Submission Page

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EMMA Submission Page

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EMMA CUSIP Page

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EMMA CUSIP Page

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EMMA Contact Info Page

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EMMA Upload Page

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EMMA will

warn you

about this

EMMA Upload Page

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EMMA Preview Page

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After Publication on EMMA

Once you click “Publish”, the main Submission webpage will load

This time, there will be a button to allow you to

“Print Submission Confirmation”

EMMA will also send you a Confirmation Email

We highly recommend that you print the Confirmation, either via the

link or the email

If there is ever a question regarding whether a filing was made, or if

you need to amend a filing, you will need the Submission ID number

from the Confirmation

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EMMA Material Event Filing

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Compliance Strategy/ Best

Practices

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Compliance Strategy/Best Practices

Written Policy

Dissemination Agent

EMMA – E-mail Reminders

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Compliance Strategy

Written Policy

This policy should include the following information:

» Who is in charge?

» A file of Continuing Disclosure Agreements, review reporting

requirements and reporting dates

» Confirm all necessary data is filed timely

» Annual review

» Monitor material events

» Periodic training

Even if a dissemination agent is hired it is ultimately the Issuer’s

obligation to confirm required filings are made on time and with

complete and accurate information

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Compliance Strategy Dissemination Agent

Dissemination Agent

A dissemination agent can fill the following roles:

» Remind and assist in required filings

» Provide disclosure templates for annual filings

» Provide corrective action for failed filings

» Assist with filings of voluntary or material event filings

Dissemination agents usually cannot monitor if there has been a

material event

» Issuer must notify dissemination agent of a material event

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MSRB EMMA E-mail Reminders

The MSRB EMMA site allows users to set up e-mail alerts in

advance of required filings

Signing up for these can provide peace of mind that required filing

dates will not be missed

For example, an e-mail reminder alert can be scheduled for 60 days

before required annual filings

This reminder will occur annually unless canceled

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CONTACT INFORMATION

Jennifer BlaserDinsmore & Shohl LLP

191 W. Nationwide Blvd., Ste. 300

Columbus, Ohio 43215

Phone: (614) 233-5391

jennifer.blaser@dinsmore.com

Diana SilveiraDinsmore & Shohl LLP

191 W. Nationwide Blvd., Ste. 300

Columbus, Ohio 43215

Phone: (614) 233-5406

diana.silveira@dinsmore.com

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