What is an Official Statement, and why is it important?

• A. An Official Statement is a marketing brochure produced by underwriters to promote the issue.
• B. An Official Statement is the primary disclosure document describing the security, terms, risks, and financing—used by investors to evaluate the issue.
• C. An Official Statement is a tax form filed by the issuer with the state.
• D. An Official Statement is a broker-dealer's quarterly report.

Answer: (B)

An Official Statement is the primary disclosure document created by the issuer (with help from the underwriter) that lays out all the essential details about a municipal security—the security type, terms, financing, risks, use of proceeds, debt structure, and financial information. Investors use this document to evaluate the issue and understand exactly what they’re buying, including how the debt will be paid and what risks exist. It is not a marketing brochure, a tax form, or a broker-dealer quarterly report; those materials serve different purposes. Because the Official Statement provides the official, comprehensive information investors rely on to assess an offering, this description best captures what it is and why it matters.