SEC Municipalities Continuing Disclosure Cooperation Initiative

Date:                September 18, 2014


To:                   Michael Green, Superintendent


Subject:           SEC Municipalities Continuing Disclosure Cooperation (MCDC) Initiative


From:              Stacy Brown, Director of Business Services


In March, the SEC announced the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative  under which municipal issuers and investment bankers could self-report possible instances in which and Official Statement inaccurately described the issuer’s history of compliance with its continuaing disclosure obligations.  Last month, I received notification of the initiative from two of our bond underwriters (Piper Jaffray and Martin Nelson & Co, Inc.), and Faith Pettis, Bond Counsel.  I received a letter from Piper Jaffray that they have reviewed the bond issue they were involved with and have not found any instances of noncompliance which would require them to self-report.  However, I also received a call from Jim Blumenthal, Martin Nelson & Company, Inc. that they would be self-reporting themselves as underwriter and Woodland School District as issuer for an issue with the 2012 refunding issue of bonds originally issued in 2005 (copy of this letter is also attached).


I contacted Faith Pettis, Bond Counsel, to consult on the whole MCDC Initiative and what this means to Woodland.  She explained that the motivation for self-reporting for underwriters is vastly different than that of the issuers, as are the requirements.  She explained that for issuers, the noncompliance must have occurred and been material to the Official Statement.  The whole initiative came about because a CA school district stated in numerous bond issues that they were in compliance with continuing disclosures, when in fact they had never filed any continuing disclosures.


Martin Nelson & Company, Inc. is self-reporting that the March 2012 Official Statement stated that the district was in compliance with continuing disclosure.  Actually, the district had filed the 2008 financial statement information late, and this was not disclosed in the official statement.  Faith and I discussed and determined that this was not a material misstatement.  Faith also explained that this late filing came to light when the first WHS bonds were issued in August 2012, and was disclosed as such in the Official Statement.  Since the misstatement is not material, and has already been disclosed, Michael and I, upon Faith’s recommendation, have decided not to self-report under the MCDC Initiative.


Faith suggested I have an official MCDC file which includes a memo that explains why the district is not self-reporting, as well as some other documentation, including the district Post Issuance Compliance Policy.  I have included the draft copy of Faith’s memo which I would like to discuss at the meeting.  Also included on the agenda is a first reading of the Post Issuance Compliance policy, which was included in the 2012 Official Statement.  It is not required to be approved by the board as a part of the official board policies, but Michael and I both think this should be included, in order to not lose track of this policy in the future.


Please let me know if you have any questions.