Saturday, April 12, 2014

Senate Legislation Would Enhance Disclosure Around Municipal and Corporate Debt Securities

Bi-partisan legislation introduced by Senator Mark Warner (D-VA) would enhance the disclosure to investors in municipal and corporate debt securities. The bill is co-sponsored by Senator Tom Coburn (R-OK). The Bond Transparency Act, S. 2114, would amend the Exchange Act to provide that a broker, dealer, or municipal securities dealer that effects a riskless principal transaction must disclose to the customer, in writing, at or before the time of completion of the transaction, the amount of the difference between the customer's purchase price and the broker's, dealer's or municipal securities dealer's purchase price; or the customer's sale price and the broker's, dealer's, or municipal securities dealer's sale price. The Act would define a riskless principal transaction to mean a transaction in which a broker, dealer, or municipal securities dealer receives a customer order to buy or sell any municipal securities and, after receiving the customer order, buys the municipal securities from, or sells the municipal securities to, another person, while acting as principal for its own account, to complete the customer order; and any other transaction the SEC identifies by rule as a riskless principal transaction.

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