Good morning. My name is Elisse Walter, and
on behalf of the Chairman, my fellow Commissioners
and the staff of the Securities and Exchange
Commission ("SEC" or "Commission"), I am delighted
to welcome you to our second field hearing
on the State of the Municipal Securities Market,
this one taking place here at the Commission's
headquarters. For those of you watching by
webcast, I'd like to extend a virtual welcome
as well.
OVERVIEW OF FIELD HEARINGS
Today's event is one of a series of field
hearings across the nation that we launched
earlier this fall in order to learn about
the current state of the municipal securities
market, to hear from interested parties and
to gather ideas for potential improvements
in this area. We held our first hearing in
San Francisco and found it to be extremely
helpful. We learned a lot about the topics
covered at that hearing — disclosure, ratings,
significant liabilities such as pensions,
other post-employment benefits and derivatives,
internal controls and the investor experience.
We anticipate holding additional field hearings
in Florida, Texas, Alabama, and Illinois.
Each field hearing will include participants
from the local region and will focus on some
of the issues we are examining. At those hearings,
we may revisit some of today's topics and
those we addressed in San Francisco, but we
will also cover many others, such as: investor
education; conduit borrowers; offering participants,
professionals and market intermediaries; sales
practices; distressed communities; small issuers;
529 Plans; and pricing and quotation issues.
With respect to this last topic — pricing
and quotation issues — I was very pleased
to learn that this will be an area of particular
focus in a study of the market and market
structure that the MSRB is initiating. I imagine
you'll hear a bit more about that study during
the Self-Regulation panel this afternoon,
but I wanted to make special note of it, as
this topic is one in which I have taken a
personal interest. I am delighted that the
MSRB has decided to review these important
issues as it seeks opportunities to improve
the quality of the municipal securities market
for the benefit of investors.
At the conclusion of all of the hearings,
the Commission staff will prepare a report
concerning what we have learned, including
their recommendations for further action that
we should pursue. These may include recommendations
for changes in legislation, regulations, and
industry practice. These hearings will be
instrumental in informing those recommendations.
I was very pleased that our Chairman Mary
Schapiro asked me to lead this series of field
hearings, as I have long had an interest in
strengthening investor protection mechanisms
applicable in this important market. Although
I — and my colleagues at the Commission
 — have thought about municipal securities
issues for a long time, I look forward to
deepening and broadening my knowledge base
through this "learning tour," reexamining
my opinions and developing new ideas.
INTRODUCTIONS
Let me introduce you to my colleagues who
will be sitting with me at this table during
the day. We are fortunate to be joined this
morning by Chairman Schapiro. We all owe her
a debt of gratitude for placing municipal
securities high on the Commission's priority
list, and instituting this series of field
hearings, which she announced last spring.1
We are also fortunate to have nearly all the
Commissioners present this morning. To my
right, are my fellow Commissioners Luis Aguilar
and Troy Paredes. Commissioner Kathleen Casey
is in New York today co-chairing the CPSS-IOSCO
Steering Group meeting, but would have loved
to have been here. Next to Commissioner Paredes
is Robert Cook, the Director of the Division
of Trading and Markets and, at the far end
of the table is Lori Schock, the Director
of the Office of Investor Education and Advocacy.
We will also be joined later today by Jim
Kroeker, the Commission's Chief Accountant.
Not everyone at this table will be able to
stay for the full hearing, but some of my
colleagues will be with me during each of
the panel discussions. Our role will be to
listen, learn and engage with the panelists
by asking questions. In addition to welcoming
you, I remind you, on behalf of myself and
all other Commission participants, of the
Commission's standard disclaimer — that
is — our remarks today represent our own
views, and not necessarily those of the Commission,
other Commissioners, or members of the staff.2
As the Chairman has noted in the past, to
grapple with the complex issues presented
by the municipal securities market, we need
to harness the ideas of a wide range of people
who have experienced this market from many
different perspectives3 — which is exactly
why we are here today. We have assembled a
diverse group of panelists for each of five
panels covering topics ranging from market
stability and liquidity to the investor experience
to self-regulation to accounting and finally,
to Build America Bonds ("BABs"). Today's panels
will be made up of state and local government
officials, municipal securities investors,
an academic and experienced municipal market
professionals representing the broker-dealer,
municipal advisor, muni analyst, institutional
investor, bond insurer and auditor perspectives.
Thank you all for so generously agreeing to
participate — we are sure to have interesting
and informative discussions on these important
topics.
The moderators of today's panels are two staff
members well-known to most of you — Amy
Starr, Senior Special Counsel for Capital
Markets, Office of the Chief Counsel, Division
of Corporation Finance and Martha Haines,
Chief of the Office of Municipal Securities,
Division of Trading and Markets. My appreciation
goes as well to Kayla Gillan, Chairman Schapiro's
Deputy Chief of Staff, who is leading this
effort for the Commission staff, my counsels
Alicia Goldin and Lesli Sheppard who have
been indispensable to this effort, and Rachel
Hurnyak from Chairman Schapiro's office who
has handled the logistics for this hearing
and has done a phenomenal job of keeping us
all organized.
I would also like to welcome and introduce
our fellow regulators who have joined us today:
From the Municipal Securities Rulemaking Board
("MSRB"), we have Alan Polsky, a member of
the MSRB's Board, and Lynette Hotchkiss (who
will be participating in our Self-Regulation
panel this afternoon), Hal Johnson and Ernie
Lanza from the MSRB Staff. From the Financial
Industry Regulatory Authority ("FINRA"), we
have Tom Selman (who will also be participating
in the Self-Regulation panel), Angela Goelzer,
Matthew Shimkus, Malcolm Northam and Cindy
Friedlander. The MSRB and FINRA, as you well
know, play critical roles in regulating professionals
who operate in the municipal market and their
assistance has been invaluable. Also attending
today's event are colleagues from the Government
Accountability Office, which has been tasked
with studying various aspects of the municipal
securities market pursuant to the Dodd-Frank
Wall Street Reform and Consumer Protection
Act. And, among those participating as panelists
are several highly knowledgeable federal,
state and local officials — John J. Cross,
III, Associate Tax Legislative Counsel, at
the Department of the Treasury, Nancy K. Kopp,
Treasurer of the State of Maryland; and Tim
Firestine, Chief Administrative Officer of
Montgomery County, Maryland.
STRUCTURE OF TODAY'S HEARING AND OTHER LOGISTICS
We have an exciting agenda for today — packed
with interesting and timely topics. The format
of today's field hearing will entail five
panels covering issues relating to market
stability and liquidity, the investor experience,
self-regulation, accounting and BABs. As moderators,
Amy and Martha will introduce their topics
and panelists. Each panelist will then make
brief opening remarks. Following the opening
remarks, the panelists will be asked questions
by the moderator and those of us at this table.
We will look to each panel to help us to understand
better the particular concerns of different
market participants, highlight key areas for
improvement, and provide some concrete ideas
for moving forward. I hope this will be a
comfortable, candid and enlightening discussion,
and I encourage the panelists to engage in
a dialogue with each other in addition to
addressing our questions.
A few housekeeping items before we begin.
First, we'd like to ask the panelists, moderators,
and other questioners to please stand your
nameplate vertically when you would like to
speak. Second, there will be a lunch break
from 12:00 to 1 p.m. We would ask those of
you attending in person to bear in mind the
security checkpoint in our lobby, and plan
to budget at least 10 minutes upon your return
from lunch for that process. Our last panel
of the day will conclude by 5:00 p.m. This
hearing is being webcast and an archived version
will be available on our website. Additionally,
a written transcript of today's event will
be made available on the Commission's website,
as well as any written statements provided
by the panelists. Finally, we encourage investors
and all other interested parties to submit
comments related to the field hearing topics
and any other topics related to the municipal
securities market to assist the Commission
staff in determining whether to recommend
changes to laws, regulations, or best practices
to better protect municipal securities investors.
Comments may be submitted by using the comment
form on the SEC website or sending an e-mail
to munifieldhearings@sec.gov.
Again, we're so pleased that you are all here
today (or watching via webcast) and hope this
will prove to be a terrific learning experience
for all.
I'll now turn it over to Amy Starr, who will
introduce our first panel to you.
