'DAC Bonds' Fast Becoming the Electronic Disclosure System of Choice for the Municipal Bond Market.

Financial/Investment Reporters and Columnists

WINTER PARK, Fla.--(BUSINESS WIRE)--Aug. 13, 2002

Issuers, Investment Banks, Rating Agencies, Financial

Advisors and Investors Use Digital Assurance

Certification (DAC), an Electronic Reporting System,

as the 'EDGAR' for Municipal Bonds

In a climate where full disclosure has become imperative, issuers of municipal bonds are increasingly using the electronic reporting system created by Digital Assurance Certification (DAC) (www.dac-ey.com), an Ernst & Young LLP affiliate company, to meet their own disclosure regulations.

Issuers, such as the Mayo Clinic, The Illinois Development Finance Authority (State of Illinois), San Francisco Community College, Bon Secours Health System, Metro-Washington (D.C.) Airports Authority, City of Miami (Florida), Cypress-Fairbanks Independent School District (Texas), and Cooper Health System (Camden, NJ), are among a growing list of municipal bond issuers who now rely on DAC's Web-based reporting system.

DAC's reporting system enables issuers to electronically file reliable, timely disclosure information to investors in compliance with the SEC's Rule 15c2-12. The Rule requires issuers of tax-exempt bonds sold after July 3, 1995 to provide ongoing reports of operating data and financial information over the life of the bonds and report their failures to do so in notices and in future offering documents. In addition to handling all the filing work for the issuer, DAC automatically provides 60- and 30-day reminders that filing dates are drawing near.

"DAC is good news for muni-bond issuers who have had trouble complying with disclosure agreements," according to Paula Stuart, Chief Executive Officer, Digital Assurance Certification. "It's also good news for investors, who have been vocal in their need for easier access to information when deciding whether to buy, sell or hold an issuer's bonds. And, it's especially helpful for dealers who need a quick and reliable 'thumbs up or down' as to whether an issuer is providing information before they recommend a particular bond to a customer."

"DAC Bonds" are fast becoming a benchmark for keeping investors informed and for issuers to satisfy obligations agreed to in Continuing Disclosure Agreements. Many issuers recognize that in troubled times, especially, providing more information to investors is the way to go. Dennis Roemer, CFO, Cooper Health System, Camden, NJ said, "We have grown to understand that our silent partners are those who have invested in our bonds." Bon Secours is using DAC's Web-based site "to support its efforts to improve investor access to financial information," said Michael W. Cottrell, CFO and Senior Vice President, Bon Secours.

A significant number of municipal issuers fail to comply with their agreements under the SEC rule, many unwittingly, according to recent surveys by the SEC and the National Federation of Municipal Bond Analysts. When issuers do file, the financial statements submitted are often incomplete, not updated regularly and/or not filed with the bond identification numbers (CUSIP) needed to link the information to the proper bond issues.

"The result of spotty compliance," says Paul S. Maco, former Director of the SEC's Office of Municipal Securities responsible for helping to create the regulation, "is a credibility problem for the growing municipal bond market." That market has seen explosive volume growth over the years, from $444 billion in outstanding securities in 1981, to more than $1.7 trillion today. Maco is now a partner at Vinson & Elkins law firm and serves as outside counsel to DAC.

In fact, a lack of disclosure can result in interest rate penalties. "An independent study by a major Wall Street investment bank has identified a price penalty for certain issuers that don't provide good ongoing disclosure to the market," added Stuart.

As part of its full disclosure model, DAC requires that its issuers, obligated persons or agents certify that documents being posted to the site are their own. DAC will not allow an issuer entry to the site until that assertion is made.

"Good disclosure is an indication of good management, which is a factor in a bond's overall rating," said Frank Rizzo, managing director of Fitch Ratings, a bond ratings firm.

DAC also serves as an investor relations program for issuers, giving investors, particularly bond analysts, instant access to financial and operational data as well as an ability to communicate with issuers over the life of a bond. It provides a platform for investors to communicate directly with an issuer and allows for regular dialogue through the use of its conference call feature. The site, initially introduced to the market in September 2001, currently has approximately 400 issues reporting and 700 regular users including credit analysts, rating agencies, insurers, and buy- and sell-side analysts.

DAC is the only information provider to have received a "no-action" letter from the SEC. The letter says that no enforcement action will be recommended against a broker, dealer or municipal securities dealer for violation of the Rule because the dealer uses the DAC database as a source of information in it procedures to satisfy its due diligence obligations.

Visitors to DAC 's Website can access disclosure documents at no charge.

Digital Assurance Certification LLC (DAC), an Ernst & Young LLP affiliate company, is an industry leader in providing compliance reporting and investor relations programs to issuers of municipal debt. For more information on DAC's services, visit www.dac-ey.com.