In remarks at the 2018 Municipal Securities Disclosure Conference, SEC Office of Municipal Securities Director Rebecca Olsen and Commissioner Kara M. Stein outlined the two different approaches they believe the SEC should take to improve the municipal issuer disclosures.
Echoing SEC Chair Jay Clayton's recent remarks, Ms. Olsen argued that improvements to disclosures should first and foremost ensure that investors have "timely access to current material information." Ms. Olsen noted that the SEC is particularly committed to that goal, as demonstrated by recent amendments to Exchange Act Rule 15c2-12. As previously covered, the amendments require municipal securities issuers to disclose material financial obligations that could impact an issuer's liquidity and overall creditworthiness.
In contrast, Ms. Stein advocated for further environmental, governance and social innovations to municipal issuer disclosures. She approved of several recent innovations such as "green muni bonds," in which an issuer agrees to use all of the bond proceeds for environmentally friendly purposes. However, Ms. Stein stated that "more work needs to be done" to further this goal.
Commentary / Steven Lofchie
Notwithstanding Commissioner Stein's continuing support of ESG, it is nowhere in the SEC's mission under the securities laws to encourage ESG investments by municipal issuers. The SEC should stick to its knitting: mandating and enforcing good disclosure and letting investors decide for themselves how to invest.
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