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Regular Session, 2014
SENATE BILL NO. 384
BY SENATOR LAFLEUR
BONDS. Requires issuers of state municipal securities to comply with certain continuing
disclosure rules of the United States Securities and Exchange Commission. (8/1/14)
AN ACT1
To enact R.S. 39:1438, relative to Louisiana municipal securities; to require that municipal2
securities of public entities comply with the continuing disclosure rules of the United3
States Securities and Exchange Commission; to provide definitions; to provide for4
recordkeeping and audit procedures associated with continuing disclosure; and to5
provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 39:1438 is hereby enacted to read as follows: 8
ยง1438. Issuers of securities; continuing disclosure requirements; audit9
requirements10
A. Definitions. For purposes of this Section:11
(1) "Auditor" means the legislative auditor or any private accounting12
firm which prepares the annual financial audit of a public entity under rules of13
the legislative auditor regarding the audit of governmental entities, quasi-14
governmental entities, or entities otherwise subject to public audit by the15
legislative auditor.16
(2) "Continuing disclosure agreement" means any agreement entered17 SB NO. 384
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into by an obligated person which sets forth the continuing disclosure1
obligations of such obligated person pursuant to the SEC rule.2
(3) "EMMA" means the Electronic Municipal Market Access system3
maintained by the Municipal Securities Rulemaking Board.4
(4) "Issuer" means any "issuer of municipal securities" as defined in the5
SEC rule.6
(5) "Municipal securities" means any securities which are issued by a7
public entity. As used herein, the term "securities" shall include both taxable8
and tax-exempt obligations and shall be construed broadly to include bonds,9
notes, certificates, loans, financing leases, and any other type of financial10
instrument which would commonly be considered municipal securities.11
(6) "Obligated person" has the meaning defined in the SEC rule.12
(7) "Public entity" means the state, its agencies, departments, boards,13
commissions, parishes, municipalities, school boards, special districts, special14
authorities, and any other political subdivision or other entity created by any15
of the foregoing.16
(8) "SEC rule" means the municipal securities continuing disclosure rule17
of the United States Securities and Exchange Commission codified as Section18
240.15c2-12 of Title 17 of the Code of Federal Regulations, together with all19
corresponding rules, updates, notices, and interpretations of the United States20
Securities and Exchange Commission and the Municipal Securities Rulemaking21
Board, as may be amended from time to time.22
B. Findings and purpose. The legislature recognizes that public entities23
often act as issuer or obligated persons of municipal securities and therefore are24
often subject to the SEC rule, which was established in order to provide25
municipal securities investors with more timely and transparent access to26
financial and other material information while such securities remain27
outstanding. The legislature finds that the continuing disclosure requirements28
of the SEC rule are in the public interest, and now desires to establish29 SB NO. 384
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words in boldface type and underscored are additions.
procedures to provide for compliance and audit with respect to municipal1
securities issued in the state.2
C. Recordkeeping. (1) Every public entity shall continuously maintain:3
(a) A list of all Louisiana municipal securities for which the public entity4
is the issuer or an obligated person.5
(b) A copy of all continuing disclosure agreements to which the public6
entity is a party.7
(c) If, pursuant to a continuing disclosure agreement, the public entity8
is responsible for filing notices of changes in bond ratings, a list of current9
ratings for such securities, if any.10
(2) All records required to be kept by a public entity under this Section11
shall be subject to inspection by the public entity's auditor.12
D. Audit. As part of its annual financial audit of a public entity, a public13
entity's auditor shall:14
(1) Review the public entity's compliance with the recordkeeping15
requirements of this Section.16
(2) Review the public entity's filings on EMMA to determine if such17
filings are in compliance with the continuing disclosure agreements.18
(3) Provide a report of its findings for each issue of securities in the19
public entity's annual financial audit.20
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Martha S. Hess.
DIGEST
LaFleur (SB 384)
Present law provides for the issuance of bonds, notes, certificates, or other obligations or
securities for the repayment of borrowed money, by public entities.
Proposed law retains present law but further provides procedures to provide for compliance
with the municipal securities continuing disclosure rule of the United States Securities and
Exchange Commission.
Proposed law provides for definitions of "auditor","continuing disclosure agreement",
"EMMA", "issuer", "municipal securities", "obligated person", "public entity", and "SEC
rule". SB NO. 384
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words in boldface type and underscored are additions.
Proposed law provides for recordkeeping by public entities by requiring them to
continuously maintain:
(1)A list of all Louisiana municipal securities for which the public entity is the issuer
or an obligated person.
(2)A copy of all continuing disclosure agreements to which the public entity is a party.
(3)If, pursuant to a continuing disclosure agreement, the public entity is responsible for
filing notices of changes in bond ratings, a list of current ratings for such securities,
if any.
Proposed law provides that all records required to be kept by a public entity under this
Section shall be subject to inspection by the public entity's auditor.
Proposed law provides that as part of its annual financial audit of a public entity, a public
entity's auditor shall:
(1)Review the public entity's compliance with the recordkeeping requirements of this
Section.
(2)Review the public entity's filings on EMMA to determine if such filings are in
compliance with the continuing disclosure agreements.
(3)Provide a report of its findings for each issue of securities in the public entity's
annual financial audit.
Effective August 1, 2014.
(Adds R.S. 39:1438)