NEW YORK, Sept 27 (Reuters) - The Securities and Exchange Commission is getting closer to completing its plan to beef up the timeliness and quality of financial disclosures by states, cities and other issuers in the U.S. municipal bond market, an official said on Tuesday.
SEC Commissioner Elisse Walter said the commission’s staff have moved from evidence-gathering to the writing of rules, but she stopped short of saying exactly when the plan, which will include an update of anti-fraud provisions, will emerge.
“The report will focus on the short-run answer to disclosure requirements,” Walter said in a video appearance before the Securities Industry and Financial Markets Association’s Municipal Bond Summit.
She added that SEC staff was focused on what is practicable and not “pie in the sky.”
“They are looking for incremental changes,” she said.
In the longer-term, Walter said she hoped the SEC would focus more on fixed-income markets.
Walter held a series of hearings on the muni market around the United States this year. She said the hearings had underscored problems with interest swaps, including conflicts of interest in their pricing and the ability of municipal officials to fully understand swaps.
Last summer, Congress passed a sweeping financial regulatory overhaul that changed oversight of the $3.7 trillion market. Since then, the SEC put the market under the microscope and began considering how to carry out the law’s emphasis on investor protections, such as providing bond buyers with more securities information.
As for disclosure, Walter said she did not believe the SEC would try to repeal the Tower Amendment, long a sacrosanct part of securities law, that issuers have said protects them from federal intervention in their finances.
Recently, the SEC has taken a literal interpretation of the amendment, noting it simply bars the federal government from requiring issuers to file securities documents before the bonds are sold.
Still, Walter said if disclosure standards are set, the SEC would need some kind of authority to enforce those standards.
The SEC, which won a settlement last year with New Jersey over questionable pension statements, also needs more options or tools to go after governments, according to Walter.
“If there is a problem, we are stuck with a nuclear bomb action,” Walter said, referring to the SEC’s anti-fraud provisions. (Reporting by Karen Pierog, additional reporting by Lisa Lambert in Washington; Editing by Kenneth Barry)