Bond Accountability Commission 2 Recommendations Page 81
Unwillingness to Stand Fully Behind Disclosure Information or To Cooperate with Investigatory Efforts Bond insurers expect municipal securities issuers, such as CMSD, to certify both the material accuracy and material completeness of the issuers’ disclosure information.97
In 2004, CMSD provided the following certification— Except as to the information in the Preliminary Official Statement and the Official Statement under the headings Underwriting, Summary of Certain Terms of the Bonds— Book Entry Method, Security and Sources of Payment—Bond Insurance and in Exhibit A [Text of Legal Opinion], Exhibit B [Book-Entry Method], and Exhibit D [Bond Insurance Policy Specimen] and information on the cover of the Official Statement as to the offering prices for the Bonds, as to all of which no representation is made, on the respective dates of the Preliminary Official Statement and the Official Statement and on the date of delivery of the Bonds to the Original Purchaser (being the date of this certificate), the Preliminary Official Statement and the Official Statement did not and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. [Emphasis added.] It is appropriate for CMSD to certify the material accuracy and completeness of information that CMSD knows or controls. In an era of increasing municipal securities litigation, however, CMSD should consider carefully what information contained in official statements and continuing disclosure documents CMSD actually knows and what it does not know. In that connection, CMSD should consult with personnel within CMSD’s organization who have specific knowledge (e.g., CMSD’s insurance managers regarding CMSD’s insurance programs, CMSD’s pension administrators regarding pension programs, and CMSD’s human relations managers regarding numbers and classifications of employees, unions, and labor conditions). In the event that CMSD does not have sound assurance of its knowledge regarding particular information, CMSD should consider with its Financial Advisors and Bond Counsel what CMSD is able to do to gain the necessary assurance. In some instances, that may require investigative steps by CMSD and, in others, may involve investigative steps by CMSD’s Financial Advisors and Bond Counsel with information that is communicated by them to CMSD and others in certifications or opinions or other written forms.
Published on May 14, 2014