Spoke to a very helpful, very pleasant gentleman at MSRB today. He very clearly conveyed this reality: SEC has determined that Rule 15c2-12 applies to municipal fund securities. I'm talking about material event disclosure requirements--G-17 (see blog entry below)--in the context of 529 plans. To the extent municipal issuers file notices on MSRB's new EMMA portal, firms that offer/sell 529 plans MUST review those notices and provide the material event information to their customers prior to the sale. As a practical matter, you won't see many such notices relating to 529 plans.
So here's what you do: build into your procedures this requirement; train your reps on how to use EMMA; supervise 529 sales to make sure disclosures are being made when required.
The EMMA site is easy to use. Go to http://emma.msrb.org/. Click on the '529 Plan Search' box with the graduation cap icon; accept the site terms; in the orange box, select a state and hit the arrow; then look for the plan you are about to sell to a customer. Click on that plan and you'll see links to the disclosure statements and, IF there are material event notices, you'll see a link to those. That is what you'll review and discuss with your customer... ta da!
So, while this is one more thing you have to worry about (and document), it's pretty easy to implement.
It's not a bad idea to inform your customers about the EMMA portal--knowledge is power. That way, you'll be educating your customers as you should.
One more helpful link for you, courtesy of the nice man at MSRB: http://www.msrb.org/msrb1/mfs/mfs7.asp This is the 'securities regulation' page explaining which regs apply to 529 plan sales.
Hmm. Wonder how long it will take before I put that hat back on? Stay tuned.
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