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Encyclopedia of Municipal Bonds: A Reference Guide to Market Events, Structures, Dynamics, and Investment Knowledge by Joe Mysak

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D

“Deadly Sins”

In amending Rule 15c2-12 in 1994, the Securities and Exchange Commission (SEC) said there were 11 material events that must be disclosed to investors as soon as possible. They rapidly took on the name of the 11 Deadly Sins. They are:

1. Principal and interest payment delinquencies.

2. Nonpayment-related defaults.

3. Unscheduled draws on reserves.

4. Unscheduled draws on credit enhancements.

5. Substitution of credit or liquidity providers, or their failure to perform.

6. Adverse tax opinions or events affecting the tax-exempt status of the security.

7. Modifications to rights of security holders.

8. Bond calls.

9. Defeasances.

10. Matters affecting collateral.

11. Rating changes.

In July 2009, the SEC proposed amendments to ...

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