The Official Statement

Municipal bonds are exempt from the registration and prospectus requirements of The Securities Act of 1933. An issuer of municipal bonds is not required to provide investors with any disclosure documents whatsoever. Should the issuer decide to prepare a disclosure document, the issuer will provide investors with the official statement. The official statement will provide investors with all of the details regarding the bonds being issued. Issuers who prepare an official statement must make it available to all purchasers, as well as to any investor or broker dealer who requests one. If the final official statement is not available at the time, a request is made for information. The broker dealer may send the interested party a preliminary official statement. Alternatively, the broker dealer may prepare and forward a summary or an abstract of the official statement. If the issuer decides not to prepare an official statement purchasers must be informed in writing that no official statement will be prepared. 

An official statement includes:

  • The Terms of the Offering
  • Purpose of the Issue
  • Summary
  • Description of Bonds
  • Description of The Issuer
  • Financial Data for The Issuer
  • Regulatory Matters
  • Feasibility Statement
  • Legal Proceedings
  • Type of Indenture (Open / Closed)
  • Authorization of Bonds
  • Security Pledged, if Any
  • Construction Plans
  • Tax Status

All municipal issues offered through negotiated underwritings are required to provide an official statement. The official statement must disclose:

  • The Underwriting Spread
  • The Initial Offering Price For Each Maturity
  • Any Fees Received From The Issuer

Prior to the completion of the transaction, the member must disclose the dealer’s participation in the offering and any control or other relationship issues between the issuer and the underwriter.



Related Articles
  1. Investing

    The Basics Of Municipal Bonds

    Investing in municipal bonds may offer a tax-free income stream, but such bonds are not without risks. Check out types of bonds and the risk factors of muni-bond.
  2. Investing

    12 things you need to know about financial statements

    Before investing, discover 12 characteristics of financial statements that can help you evaluate companies and increase your chances of choosing a winner.
  3. Investing

    Why Financial Statements Are Harder to Read Than Ever Before

    Understand four major reasons that financial statements published in 2016 are more complicated and difficult to read than they were in the past.
  4. Investing

    Consider These Municipal Bond ETFs

    Though relatively low-risk, there are still some factors to consider when taking the plunge into municipal bond ETFs.
  5. Investing

    What are Financial Statement Assertions?

    Understand financial statement assertions and what they mean in accounting. For investors, it is important that assertions be accurate.
  6. Investing

    Taxation Rules for Bond Investors

    To sum-up there are three types of bonds: government bonds, municipal bonds, and corporate bonds. Find out how each of these bonds are taxed and what you can do as an investor.
  7. Investing

    Bond Buyers: Is Your Broker Overcharging You?

    Retail investors are at a disadvantage when it comes to buying bonds, because brokers don't have to disclose everything. That’s expected to change soon.
  8. Investing

    Here's What Happens When a Bond Is Called

    Learn why early redemption occurs and how to avoid potential losses.
Frequently Asked Questions
  1. What Licenses Do Financial Advisors Need to Have?

    Understand why all financial advisors are required to be licensed, and identify the specific licenses that must be obtained ...
  2. When Is Managerial Accounting Appropriate?

    Understand the difference between managerial accounting and financial accounting. Learn common scenarios in which managerial ...
  3. Do ETFs Generate Capital Gains for Shareholders?

    Learn how exchange-traded funds (ETFs) can generate taxable capital gains for shareholders due to occasional and substantial ...
  4. Why is there a negative correlation between quantity demanded and price?

    Learn what the law of demand is, the basic assumption of the law of demand and why there is a negative correlation between ...
Trading Center