Limited Self Reporting Window Closes September 9, 2014

The U.S. Securities and Exchange Commission (the “SEC”) has announced its Municipalities Continuing Disclosure Cooperation Initiative (the “MCDC Initiative”) for municipal issuers, conduit borrowers, other obligated persons (collectively “issuers”), and underwriters of municipal securities that have been sold to the public within the last five years. The MCDC Initiative provides a settlement process in the event that an issuer self-reports materially inaccurate statements relating to prior compliance with continuing disclosure obligations set forth in SEC Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Exchange Act”).

Underwriters of publicly sold municipal securities must comply with Rule 15c2-12 under the Exchange Act. Underwriters comply with Rule 15c2-12 by requiring issuers to enter into Continuing Disclosure Certificates or Continuing Disclosure Agreements (the “Disclosure Agreements”) that require issuers to provide (1) annual updates to certain operating data that concern the operations of an issuer, (2) annual audited financial statements of an issuer, (3) notice not in excess of ten business days after the occurrence of certain material events with respect to a security issued by an issuer and (4) in a timely manner, notice of the failure of an issuer to provide annual financial information on or before the date specified in the Disclosure Agreement.

Rule 15c2-12 also requires Underwriters to obtain an official statement from an issuer that such issuer has deemed final before its municipal securities are sold to the public. The official statement must describe any instances in the previous five years in which such issuer failed to comply, in all material respects, with the obligations contained within its Disclosure Agreement.

The MCDC Initiative permits issuers and underwriters to self-report instances in which official statements may have made materially inaccurate statements relating to prior compliance with its Disclosure Agreement or Agreements. The SEC has stated that it considers such non-disclosure to be a violation of securities laws and that it has legal authority to bring charges against issuers and underwriters and the officers and employees of issuers and underwriters responsible for such materially inaccurate statements.

The SEC has stated in its MCDC Initiative that if an issuer self-reports its materially inaccurate statements to the SEC under the MCDC Initiative by September 9, 2014, then the SEC will not levy a monetary fine against the issuer provided that it (1) consents to a cease and desist order from the SEC, (2) establishes policies and procedures and training regarding its obligations under its Disclosure Agreements, (3) complies with existing Disclosure Agreements and updates any delinquent filings, (4) cooperates with the SEC in any subsequent investigations regarding false statements concerning its prior compliance with its Disclosure Agreements in the official statement and whom was responsible for such false statements, (5) discloses its settlement terms with the SEC pursuant to the MCDC Initiative in its future official statements for a period of five years, and (6) certifies to the SEC that it has satisfied all of the foregoing obligations. The SEC has not offered similar terms to the officers and employees of issuers that utilize the MCDC Initiative and these individuals may be subject to action separate and apart from any SEC action with respect to the an issuer.

The SEC has strongly incentivized underwriters to report issuers that may have made materially inaccurate statements relating to prior compliance with their Disclosure Agreement or Agreements in past official statements by offering them reduced monetary penalties if they report these instances to the SEC by September 9, 2014. The SEC has stated that if it learns of an issuer’s non-compliance from an underwriter and such issuer has not self-reported under the MCDC Initiative, or if the SEC discovers non-compliance itself, then the SEC will likely pursue monetary penalties against such issuers.

As a result of the MCDC Initiative, issuers should consider reviewing all of their official statements published within the past five years in order to determine whether those documents properly disclosed instances in which they did not comply with their Disclosure Agreements. Issuers should also contact all underwriters of their publically offered municipal securities and ask whether the underwriter has identified any instances in which non-compliance with a Disclosure Agreement was not disclosed in an official statement.

We recommend that you consult with bond counsel if you are concerned about the statements in a past Official Statement or if you are contacted by an Underwriter or Financial Advisor about the adequacy of reports made in an Official Statement in response to this program.