Posts in Rule G-42.

Starting June 23, municipal advisors will be subject to revised Rule 42 and its heightened engagement letter and disclosure obligations. SIFMA has released exposure drafts of compliance documents to help MAs meet those requirements. The drafts include a model engagement letter, disclosure statements for both new and continuing engagements and a client -intake checklist. They are here. Broadly speaking, the amended Rule imposes upon municipal advisors

  • A fiduciary duty of care and loyalty to municipal entity clients - but only a duty of care to obligated persons (like conduit ...
Posted in: Rule G-42, SIFMA

The MSRB's amended Rule G-42 becomes effective June 23, prescribing new conduct standards for municipal advisors and for the underwriters working with them. In advance of the effective date, the MSRB has published interpretive guidance on the new Rule:

For MAs, here. For Underwriters, here. On-demand webinar, here.

Broadly speaking, the amended Rule imposes upon municipal advisors
  • A fiduciary duty of care and loyalty to municipal entity clients - but only a duty of care to obligated persons (like conduit borrowers);
  • A written engagement-letter and conflict-disclosure regime;
Posted in: MSRB, Rule G-42

On Christmas Eve's eve, the SEC approved, without change, the MSRB's proposed conduct rule for municipal advisors. Broadly, the Rule imposes:

  • Fiduciary duty (care and loyalty) to municipal entity clients but only a duty of care to obligated persons;
  • Written engagement-letter and conflict-disclosure regime;
  • Suitability and KYC requirements;
  • A list of prohibited practices, including a wide-ranging (but not absolute) ban on principal transactions with municipal entity clients.

New Rule G-42 has been in the works since January, 2014 and the MSRB filed two amendments with the SEC ...

Posted in: MSRB, Rule G-42, SEC

The MSRB proposed a Revised Draft of Rule G-42 ("Duties of Non-Solicitor Municipal Advisors") by Reg. Not. 2014-12 issued July 23, 2014. We addressed the original proposal in our January 23 blog post, here. The Revised Draft Rule G-42 contains the same basic structure and objectives as originally proposed. It establishes (a) DUTIES owed by Municipal Advisors ("MA's") to Municipal Entity ("ME") clients and to Obligated Person ("OP's"); (b) An engagement-letter-type disclosure regime with certain required DISCLOSURES; (c) A suitability requirement MA's must follow ...

Posted in: MSRB, Rule G-42, SEC
The Municipal Securities Rulemaking Board ("MSRB") held a webinar Feb. 6, 2014 discussing its proposed Rule G-42 to impose a broad range of duties, proscriptions and documentation requirements upon non-solicitor Municipal Advisors ("MA's"). Some more controversial points among the proposed Rule include: (a) a broad prohibition against principal transactions, not just by MA's but also by all their affiliates; (b) consideration of whether to mandate MA insurance and require specific coverages; and (c) potential prohibition of contractual limitations on the scope of an ...
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