The Securities and Exchange Commission (SEC) yesterday announced modifications to its Enforcement Division’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative. First, the SEC has extended the deadline from September 10, 2014 to December 1, 2014 for issuers and obligors to self-report potential violations under the MCDC Initiative. The deadline for underwriters to self-report violations remains the same at September 10, 2014.

The SEC also responded to the difficulties experienced by some underwriters and issuers in identifying potential violations for periods when filings were made in the Nationally Recognized Municipal Securities Information Repository (NRMSIR) system, which pre-dated the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) system, because of the limitations of such system. The SEC announcement states that if violations are identified by the Enforcement Division after the expiration of the MCDC Initiative, the Enforcement Division will consider reasonable, good faith and documented efforts in deciding whether to recommend enforcement action and, to the extent enforcement action is recommended, in determining relief.

Finally, with respect to underwriters, the Enforcement Division has determined that implementing a tiered approach to civil penalties based on the size of the firm would encourage smaller underwriters to participate in the MCDC Initiative. The Enforcement Division’s new tiered approach to the cap on civil penalties for eligible underwriters is as follows: (i) for underwriters with 2013 reported total annual revenue of more than $100 million: $500,000; (ii) for underwriters with 2013 reported total annual revenue between $20 million and $100 million: $250,000; and (iii) for underwriters with 2013 reported total annual revenue of less than $20 million: $100,000. The annual revenues limits are based on firm-wide revenue derived from all broker-dealer activities, as further described in the amended SEC release announcing the MCDC Initiative.

Further specifics of these modifications are explained by the SEC in a detailed announcement.