Official Statement

Rule 15c2-12 defines the final official statement and the preliminary official statement, and both definitions appear below. MSRB Rule G-32 defines official statement in paragraph (c)(vii). For an offering subject to Rule 15c2-12, the definition points to the document defined in Rule 15c2-12(f)(3). For an offering not subject to Rule 15c2-12, it means a document or documents prepared by or on behalf of the issuer that is complete as of the date delivered to the underwriter and that sets forth information concerning the terms of the proposed offering of securities. Paragraph (c)(vii) adds that a notice of sale shall not be deemed to be an official statement for purposes of the rule.

What an Official Statement Typically Contains

The MSRB lists the information typically included in an official statement. The list begins with the terms of payment: the interest rate or, if the interest rate is variable, the manner in which the rate is determined, and the timing and manner of payment of the interest on and the principal of the bonds. It continues with the minimum denomination in which the bonds may be sold, whether the bonds can be redeemed by the state or local government prior to maturity and, if so, on what terms, and whether the investor has the right to require the state or local government to repurchase the bonds at their face value.

The list then turns to repayment. It includes the sources from which the state or local government has promised to make payment on the bonds, whether any bond insurance, letter of credit or other guarantees have been provided for repayment, and the consequences of a default by the state or local government. It also includes a description of outstanding debt, the authority to incur debt, limitations on debt and the future debt burden.

The last items are legal: a description of basic legal documents such as the authorizing resolution, indenture and trust agreement, and legal information such as pending proceedings that may affect the securities offered, legal opinions and tax considerations. The MSRB adds that information in an official statement includes the terms under which bonds can be redeemed prior to maturity, the sources of money pledged to repay the bonds, and the state or local government's covenants for the benefit of investors.

Rule 15c2-12 describes the final official statement by its content. Under paragraph (f)(3), the final official statement is a document or set of documents prepared by an issuer of municipal securities or its representatives that is complete as of the date delivered to the Participating Underwriter or Participating Underwriters. It sets forth information concerning the terms of the proposed issue of securities, and information, including financial information or operating data, concerning the issuers of municipal securities and the other entities, enterprises, funds, accounts and persons material to an evaluation of the Offering. 

It also sets forth a description of the undertakings to be provided under paragraphs (b)(5)(i), (d)(2)(ii) and (d)(2)(iii), if applicable, and a description of any instances in the previous five years in which each person specified under paragraph (b)(5)(ii) failed to comply, in all material respects, with any previous undertakings in a written contract or agreement specified in paragraph (b)(5)(i). Financial information or operating data may be set forth in the document or set of documents, or may be included by specific reference to documents available to the public on the MSRB's Internet website or filed with the Commission.

Municipal Securities and Federal Registration

The SEC's investor bulletin on the municipal securities market states that municipal securities are exempt from federal securities registration and reporting requirements, and that municipal securities are subject to the antifraud provisions of the federal securities laws. It states that a municipal issuer will prepare a disclosure document typically called the official statement, and that the underwriter must obtain an official statement from the municipal issuer, review it before commencing sales to investors, and distribute it to investors.

Rule 15c2-12 states an antifraud purpose in its opening paragraph. Paragraph (a) provides that, as a means reasonably designed to prevent fraudulent, deceptive, or manipulative acts or practices, it shall be unlawful for any broker, dealer, or municipal securities dealer to act as an underwriter in a primary offering of municipal securities with an aggregate principal amount of one million dollars or more, called an Offering, unless the Participating Underwriter complies with the requirements of the section or is exempted from its provisions. A broker, dealer or municipal securities dealer acting as an underwriter in an Offering is called a Participating Underwriter.

What Rule 15c2-12 Requires Before the Underwriter Sells

Paragraph (b)(1) governs the first step. Before the Participating Underwriter bids for, purchases, offers, or sells municipal securities in an Offering, it shall obtain and review an official statement that an issuer of the securities deems final as of its date, except for the omission of no more than the following information: the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, any other terms or provisions required by an issuer to be specified in a competitive bid, ratings, other terms of the securities that depend on those items, and the identity of the underwriters.

Paragraph (b)(5)(i) adds a second condition. A Participating Underwriter shall not purchase or sell municipal securities in connection with an Offering unless it has reasonably determined that an issuer of municipal securities, or an obligated person for whom financial or operating data is presented in the final official statement, has undertaken in a written agreement or contract for the benefit of holders of the securities to provide specified continuing disclosure to the MSRB. That undertaking is described in the continuing disclosure section below.

Preliminary and Final Official Statements

Rule 15c2-12 distinguishes two versions of the document by timing. Paragraph (f)(6) defines the preliminary official statement as an official statement prepared by or for an issuer of municipal securities for dissemination to potential customers prior to the availability of the final official statement. Paragraph (f)(3) defines the final official statement, as set out above, as the document or set of documents that is complete as of the date delivered to the Participating Underwriter.

The rule attaches a distribution duty to each version. Under paragraph (b)(2), except in competitively bid offerings, from the time the Participating Underwriter has reached an understanding with an issuer that it will become a Participating Underwriter in an Offering until a final official statement is available, the Participating Underwriter shall send, no later than the next business day, by first-class mail or other equally prompt means, to any potential customer, on request, a single copy of the most recent preliminary official statement, if any.

Under paragraph (b)(3), the Participating Underwriter shall contract with an issuer of municipal securities or its designated agent to receive, within seven business days after any final agreement to purchase, offer, or sell the municipal securities in an Offering and in sufficient time to accompany any confirmation that requests payment from any customer, copies of a final official statement in sufficient quantity to comply with paragraph (b)(4) and the rules of the MSRB.

Paragraph (b)(4) then governs requests for the final official statement. From the time the final official statement becomes available until the earlier of ninety days from the end of the underwriting period or the time when the official statement is available to any person from the MSRB, but in no case less than twenty-five days following the end of the underwriting period, the Participating Underwriter shall send, no later than the next business day, by first-class mail or other equally prompt means, to any potential customer, on request, a single copy of the final official statement.

Paragraph (f)(2) defines the end of the underwriting period as the later of two times: when the issuer of municipal securities delivers the securities to the Participating Underwriters, or when the Participating Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the securities for sale to the public.

Continuing Disclosure Undertakings

The final official statement describes undertakings, and paragraph (b)(5) sets out what they must provide. Under paragraph (b)(5)(i), the issuer, or an obligated person for whom financial or operating data is presented in the final official statement, undertakes in a written agreement or contract for the benefit of holders of the securities to provide the following to the MSRB in an electronic format, either directly or indirectly through an indenture trustee or a designated agent.

The first item, in paragraph (b)(5)(i)(A), is annual financial information for each obligated person for whom financial information or operating data is presented in the final official statement, or for each obligated person meeting the objective criteria specified in the undertaking and used to select the obligated persons for whom that information is presented, with the qualification that in the case of pooled obligations the undertaking shall specify those objective criteria. The second item, in paragraph (b)(5)(i)(B), is audited financial statements for each obligated person covered by paragraph (b)(5)(i)(A), when and if available, if they are not submitted as part of the annual financial information.

The third item, in paragraph (b)(5)(i)(C), is notice of events with respect to the securities being offered, in a timely manner not in excess of ten business days after the occurrence of the event. The listed events are: principal and interest payment delinquencies; non-payment related defaults, if material; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; modifications to rights of security holders, if material; bond calls, if material, and tender offers; defeasances; release, substitution, or sale of property securing repayment of the securities, if material; rating changes; and bankruptcy, insolvency, receivership or similar event of the obligated person.

The list continues with the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; appointment of a successor or additional trustee or the change of name of a trustee, if material; incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material; and default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

The fourth item, in paragraph (b)(5)(i)(D), is notice, in a timely manner, of a failure of any person specified in paragraph (b)(5)(i)(A) to provide required annual financial information on or before the date specified in the written agreement or contract. Paragraph (b)(5)(ii) adds that the written agreement or contract shall also identify each person for whom annual financial information and notices of material events will be provided, either by name or by the objective criteria used to select such persons, and for each such person shall specify, in reasonable detail, the type of financial information and operating data to be provided as part of annual financial information, and the accounting principles pursuant to which financial statements will be prepared and whether the financial statements will be audited.

Paragraph (f)(10) defines an obligated person as any person, including an issuer of municipal securities, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the municipal securities to be sold in the Offering.

Exemptions From Rule 15c2-12

Paragraph (d)(1) states that the section does not apply to a primary offering of municipal securities in authorized denominations of one hundred thousand dollars or more, if the securities meet one of two conditions. Under paragraph (d)(1)(i), they are sold to no more than thirty-five persons each of whom the Participating Underwriter reasonably believes has such financial and business knowledge and experience that it is capable of evaluating the merits and risks of the prospective investment, and is not purchasing for more than one account or with a view to distributing the securities. Under paragraph (d)(1)(ii), they have a maturity of nine months or less.

Paragraph (d)(2) addresses the continuing disclosure requirement alone. Paragraph (b)(5) does not apply to an Offering if, when the issuer delivers the securities to the Participating Underwriters, three conditions are met. No obligated person will be an obligated person with respect to more than ten million dollars in aggregate amount of outstanding municipal securities, including the offered securities and excluding securities that were offered in a transaction exempt under paragraph (d)(1). An issuer or obligated person has undertaken, in a written agreement or contract for the benefit of holders, to provide annual financial information or operating data and notices of the events specified in paragraph (b)(5)(i)(C) within ten business days, with identifying information. And the final official statement identifies by name, address, and telephone number the persons from which the information, data, and notices can be obtained.

Paragraph (e) gives the Commission exemptive authority. Upon written request, or upon its own motion, the Commission may exempt any broker, dealer, or municipal securities dealer, whether acting as a Participating Underwriter or otherwise, that is a participant in a transaction or class of transactions from any requirement of the section, either unconditionally or on specified terms and conditions, if the Commission determines that the exemption is consistent with the public interest and the protection of investors.

MSRB Rule G-32 and Delivery to Customers

MSRB Rule G-32 is titled Disclosures in Connection with Primary Offerings. Its summary states that it requires underwriters to submit certain information to the Electronic Municipal Market Access system, known as EMMA, and dealers to provide certain information to customers in connection with primary offerings.

Paragraph (a)(i) provides that no broker, dealer or municipal securities dealer shall sell, whether as an underwriter or otherwise, any offered municipal securities to a customer unless it delivers to the customer, by no later than the settlement of the transaction, a copy of the official statement or, if an official statement is not being prepared, a written notice to that effect together with a copy of a preliminary official statement, if any. The MSRB's page on official statements restates the timing: in connection with sales of new issue securities, the official statement must be delivered to the investors by no later than the settlement of the investment, generally when the investor takes ownership and has paid for the investment. The page adds that investors should not feel constrained to wait for the dealer to deliver the required disclosure information and can request more time to review the official statement.

Paragraph (a)(ii) provides that the delivery obligation in paragraph (a)(i) shall be deemed satisfied if two conditions are met: the offered municipal securities being sold are not municipal fund securities, and the underwriter has made the submissions to EMMA required under paragraph (b)(i)(A) or (b)(i)(B)(1). The second condition applies solely to sales to customers by brokers, dealers and municipal securities dealers acting as underwriters in respect of the offered municipal securities being sold.

The MSRB's page also states that municipal securities dealers or banks must provide investors with information material to their transaction at or prior to the agreement to enter into that transaction, and that this disclosure often will be provided by supplying the investor with a copy of the issuer's official statement.

Submission of Official Statements to EMMA

Rule G-32 also governs what the underwriter submits. Under paragraph (b)(i)(A), the underwriter of a primary offering of municipal securities shall submit Form G-32 information relating to the offering in a timely and accurate manner, except as otherwise provided in paragraph (F) of that subsection. Under paragraph (b)(i)(B)(1), and except as otherwise provided in paragraph (C), (E) or (F) of that subsection, the underwriter shall submit the official statement to EMMA within one business day after receipt of the official statement from the issuer or its designee, but by no later than the closing date. Paragraph (c)(ii) defines the closing date as the date of first delivery by the issuer to or through the underwriter of municipal securities sold in a primary offering.

Under paragraph (b)(i)(D), for a primary offering to which that paragraph applies, the underwriter shall submit to EMMA, by no later than the closing date, either the preliminary official statement for the offering or, if none has been prepared, notice that no preliminary official statement has been prepared.

Paragraph (b)(iii) governs amendments. If the underwriter for a primary offering has previously submitted to EMMA an official statement, preliminary official statement or advance refunding document and the issuer amends it during the primary offering disclosure period, the underwriter must, within one business day after receipt of the amendment from the issuer or an agent of the issuer, submit the amendment to EMMA and all information required to be submitted by Form G-32 relating to the amendment. Paragraph (c)(ix) defines the primary offering disclosure period as the period commencing with the first submission to an underwriter of an order for the purchase of offered municipal securities or the purchase of such securities from the issuer, whichever first occurs, and ending 25 days after the final delivery by the issuer or its agent of all securities of the issue to or through the underwriting syndicate or sole underwriter.

The MSRB's page on official statements states the same obligations in general terms. Underwriters are required to submit to the MSRB for posting on EMMA copies of the official statement for virtually all new issues of municipal securities, and copies of any amendments to the official statement up until the 25th day after the settlement of the underwriting.

Finding Official Statements on EMMA

According to the MSRB, EMMA provides free access to official statements and typically posts the official statement to the public immediately upon its submission by the underwriter to the MSRB. The SEC's investor bulletin likewise states that an investor can find both official statements and continuing disclosures online and free of charge through EMMA.

The MSRB gives two reasons an investor may not find an official statement on EMMA. The most common reason is that the investor is searching for an official statement for a newly issued security that the MSRB has not yet received. State and local governments usually do not complete preparation of the official statement until after the first trading day of the security. The other reason is that the official statement was prepared prior to 1990, because before 1990 underwriters of municipal securities were not required to provide the MSRB with copies of official statements.

What an Official Statement Does Not Do After the Offering

According to the MSRB, official statements for bond offerings generally speak only as of their date and are intended for use in connection with the initial distribution of the securities through the underwriters. They generally are not intended to provide complete disclosure for bonds trading in the secondary market, although they continue to be valuable as the most comprehensive source for information on the specific terms of bonds. There is no explicit obligation on the part of the issuer to update the official statement.

Ongoing information comes from a separate source. Rule 15c2-12 conditions the underwriter's purchases and sales on the undertaking described above, under which annual financial information, audited financial statements when and if available, notices of listed events within ten business days, and notice of a failure to provide annual financial information are provided to the MSRB. The SEC's investor bulletin states that an investor can in most cases, subject to limited exceptions, expect municipal issuers under a continuing disclosure agreement to make annual disclosures, which must be provided at least annually, and material event disclosures, which must be provided within ten business days after the occurrence of certain listed events.

Official Statements in FINRA's Examination Outline

FINRA's Securities Industry Essentials examination content outline carries a 2025 copyright. Section 1 of the outline, Knowledge of Capital Markets, includes topic 1.4, Offerings. That topic lists the types and purpose of offering documents and delivery requirements, with official statement, program disclosure document and prospectus given as examples, and it lists MSRB Rule G-32, Disclosures in Connection with Primary Offerings, among the MSRB rules. Section 3, Understanding Trading, Customer Accounts and Prohibited Activities, lists Rule 15c2-12, Municipal Securities Disclosure, among the rules under the Securities Exchange Act of 1934 for topic 3.3, Prohibited Activities. Candidates should check the current outline before the examination.

Common Misunderstandings

An official statement is comparable to a prospectus only in some respects. The MSRB uses the words in some respects, and the SEC's investor bulletin states that municipal securities are exempt from federal securities registration and reporting requirements.

Exemption from registration does not remove antifraud coverage. The SEC's investor bulletin states that municipal securities are subject to the antifraud provisions of the federal securities laws, and paragraph (a) of Rule 15c2-12 makes certain conduct unlawful as a means reasonably designed to prevent fraudulent, deceptive, or manipulative acts or practices.

An official statement that the issuer deems final can still leave out information. Paragraph (b)(1) permits the omission of no more than the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, competitive bid terms, ratings, other terms that depend on those items, and the identity of the underwriters.

A preliminary official statement is not the final official statement. The preliminary version is prepared for dissemination to potential customers before the final version is available, and the final version is complete as of the date delivered to the Participating Underwriter.

Rule 15c2-12 is addressed to the underwriter. Paragraph (a) makes it unlawful for a broker, dealer or municipal securities dealer to act as an underwriter in an Offering unless the Participating Underwriter complies or is exempted, and paragraph (b)(5)(i) requires the underwriter to have reasonably determined that the undertaking exists.

Not every municipal offering is subject to the rule. An Offering is a primary offering with an aggregate principal amount of one million dollars or more, and paragraph (d)(1) exempts certain primary offerings in authorized denominations of one hundred thousand dollars or more.

An official statement is not updated automatically. According to the MSRB, official statements generally speak only as of their date, and there is no explicit obligation on the part of the issuer to update the official statement.

A missing official statement on EMMA does not mean none exists. The MSRB gives two reasons it may be absent: the official statement for a newly issued security may not yet have been received, and official statements prepared before 1990 may not be there.

Delivering the official statement to a customer and submitting it to EMMA are separate duties. Paragraph (a)(i) of Rule G-32 requires delivery to the customer by no later than settlement, while paragraph (b)(i)(B)(1) requires the underwriter to submit the official statement to EMMA within one business day after receipt from the issuer, but by no later than the closing date.

Key Points

An official statement is a document prepared by or on behalf of a state or local government in connection with a new issue of municipal securities, and the MSRB states that it is comparable in some respects to a prospectus.

Rule 15c2-12 requires the Participating Underwriter in an Offering of one million dollars or more to obtain and review an official statement that the issuer deems final as of its date, except for the omission of the listed items.

The preliminary official statement is prepared for dissemination before the final official statement is available, and the final official statement is complete as of the date delivered to the Participating Underwriter.

Rule 15c2-12 requires the underwriter to reasonably determine that an issuer or obligated person has undertaken to provide annual financial information, audited financial statements when and if available, and notice of listed events within ten business days.

MSRB Rule G-32 requires delivery of the official statement to a customer by no later than settlement, and submission by the underwriter to EMMA within one business day after receipt from the issuer but by no later than the closing date.

The MSRB states that official statements generally speak only as of their date and that there is no explicit obligation on the part of the issuer to update the official statement.

FINRA's outline for the Securities Industry Essentials examination lists official statements under offering documents and delivery requirements.