6.1.3 Secondary Market Disclosure

Following issuance, municipal securities trade in the secondary market. To support the needs of investors in this market, state and federal laws, including SEC Rule 15c2-12, have influenced the nature and extent of disclosures. A public agency may provide information to the municipal marketplace because it has a legal obligation to do so (e.g., in connection with an offering of municipal securities), because it has a contractual obligation to provide specified information (often an obligation compelled by regulation as a condition of participation in the public capital markets), or because the public agency has voluntarily chosen to make statements intended or likely to be relied upon by the market (e.g., speaking at a securities conference or investor meeting).

Secondary market disclosure requires care, in all cases, because information provided to the market must meet the SEC Rule 10b-5 standard. That is, it must not contain untrue statements of material facts or omit to state material facts necessary to make information provided not misleading under the circumstances. Outside a formal municipal securities offering, context determinations may be challenging. Further, when public officials speak freely, the distinctions between what should and should not be taken as a statement of fact, or as a statement intended for the securities markets, are not always clear. Continuing disclosure is discussed in detail in Section 8.4, Continuing Disclosure and Section 8.5, Other Disclosures to the Market.