MSRB Proposal Extends Rule G-37 "Pay-to-Play" Prohibitions to Municipal Advisors
In its August 18 Regulatory Notice No. 2014-15, the Municipal Securities Rulemaking Board ("MSRB") proposed amendments to Rule G-37 that would extend the long-standing "pay-to-play" prohibition's reach to newly-registered municipal advisors. The Notice is here. Rule G-37 prohibits municipal securities dealers and their municipal-finance-professionals from making political contributions to elected officials of issuers who are in a position to influence the selection of underwriters. The new proposal would extend the Rule to impose similar prohibitions on contributions by municipal advisors to those municipal-entity officials in positions able to influence the hiring of municipal advisors. The Comment period runs through October 1. The MSRB's proposal arrives even as the NY and TN Republican Parties filed suit to challenge a similar SEC rule prohibiting pay-to-play contributions by registered investment advisors, New York State Republican Committee v. SEC, No. 14-cv-1345 (USDC, D.D.C., filed August 7, 2014). The SEC implemented Rule 206(4)-5 under the Investment Advisers Act of 1940 in 2011 to curb pay-to-play practices among registered investment advisers. The suit argues that more recent Supreme Court decisions on proposed regulation of campaign finance (McCutcheon and Citizens United) compel overturning the decisions from this same court that upheld the original pay-to-play regulation (MSRB Rule G-37) almost a decade ago, Blount v. SEC, 61 F. 3d 938 (D.C. Cir. 1995), cert. denied, 517 U.S. 1119 (1996). Thomas K. Potter, III ( is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Managing Partner of the Nashville office, Tom is licensed in Tennessee, Texas and Louisiana. He has over 28 years' experience representing financial institutions in litigation, regulatory and compliance matters. © 2014 by Thomas K. Potter, III (all rights reserved)
Posted in: MSRB, SEC
Jump to Page
Arrow icon Top

Contact Us

We use cookies to improve your website experience, provide additional security, and remember you when you return to the website. This website does not respond to "Do Not Track" signals. By clicking "Accept," you agree to our use of cookies. To learn more about how we use cookies, please see our Privacy Policy.

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. These cookies may only be disabled by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.