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GFOA Executive Board Approves Policy Statement Opposing SEC Efforts to Regulate State and Local Governments

The GFOA Executive Board approved a public policy statement that opposes SEC efforts to set standards related to municipal bond disclosure documents and a government’s financial information.  The statement, Opposition to Giving SEC Authority Over the Content, Timing and Frequency of State and Local Government Financial Statements and Disclosure Documents, reiterates the GFOA’s long-standing policy that the SEC should not be allowed to expand its authority, either by legislative or regulatory means, in a manner that would supersede state authority and the principles of federalism. The policy statement is in reaction to the July 2012 SEC Report on Municipal Securities, which lists more than a dozen recommendations related to municipal securities disclosure issues.

While the GFOA believes that issuers should have robust and comprehensive disclosure policies in place, the policy statement opposes SEC interference in these areas and specifically notes that:
  • The SEC should not set standards or interfere with the authority of an independent standard-setting body to set standards related to a government’s financial information.
  • The SEC should neither directly nor indirectly impose standards related to a municipal securities issuer’s disclosure documents, including those relating to the timing, frequency, or content of those materials.
  • The SEC should not mandate that all governments follow GAAP, as established by the GASB.
  • The SEC should not set standards related to the development, use, and submission of interim financial information.

The statement also emphasizes the importance of disclosure best practices and supports the SEC’s efforts to alleviate liability risks that may exist when a government includes projections and forward-looking information in their financial documents; corporate-like disclosure standards on tax-exempt bonds issued for the private sector; and the recommendations to increase price transparency standards.

Click here to read the full statement.
 
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