SEC requires more disclosure from not-for-profit borrowers
Not-for-profit hospitals and health systems that finance construction, technology and other capital projects with tax-exempt, or municipal, bonds face expanded disclosure of financial and operating information, starting Dec. 1. The Securities and Exchange Commission voted unanimously to tighten and expand disclosure rules for tax-exempt borrowers. “The size of the municipal market reflects its significance to our economy,” SEC Chairman Mary Schapiro said at the meeting. Under the new rules, borrowers no longer have discretion over disclosure of certain information, including: failure to pay principal and interest; unscheduled payment from debt service reserves reflecting financial difficulty; unscheduled payments by parties backing bonds or their failure to perform; and defeasances and rating changes.