In a recent interview with The Bond Buyer, the Securities Exchange Commission (SEC) announced it will not bring action against additional obligated persons or underwriters who self-reported under the Municipalities Continuing Disclosure Cooperation (MCDC) program but intends to pursue unreported violations, ending months of speculation about the future of MCDC. Lee Ann Gaunt, chief of the SEC enforcement division’s public finance abuse unit, told interviewers that the SEC does not expect to recommend enforcement action against any additional parties who made voluntary disclosures about their continuing disclosure violations under MCDC. In August, the SEC entered into settlement agreements with 71 obligated persons and 72 underwriters who self-reported violations under the initiative.

Gaunt said the next step in the process is to bring action against obligated persons and underwriters who decided not to participate in the initiative, saying the SEC intends to devote significant resources in identifying violations committed by parties who did not self-report. The SEC believes obligated persons and underwriters who did not self-report under MCDC pose a high risk for future violations. Additionally, the SEC indicated it may pursue individuals associated with violations reported under the initiative. The SEC feels the goals of the MCDC initiative have been met through a raised awareness of continuing disclosure problems, which has resulted in better quality disclosure and due diligence in the market.