SEC urges fuller disclosure for muni market

Federal regulators are urging Congress to require fuller disclosure and stricter standards for the $3.7 trillion municipal securities market to help protect investors.

The Securities and Exchange Commission issued a report Tuesday after reviewing the market for bonds and other securities used to finance schools, roads and hospitals around the country.

Despite its size and importance, the SEC says the municipal securities market isn't as closely regulated as other parts of the financial markets because it enjoys exemptions under federal law. About three-quarters of the $3.7 trillion in municipal securities are held by individual investors through mutual funds and other investments.

The agency says Congress should consider, for example, giving the S-E-C authority to set disclosure standards for municipal securities and requiring their issuers to have audited financial statements.