MSRB Proposes Conduct Rules For Municipal Advisors
On Thursday, January 9, the MSRB re-proposed new Rule G-42 promulgating standards of conduct for Municipal Advisors ("MA's") subject to the almost-newly-effective SEC MA Rule, 17 CFR § §240.15Ba1-1 to 15Ba1-8 (now delayed until July 1, 2014). MSRB Notice 2014-01 covers the following principal objectives: I. It establishes an MA's fiduciary duty to Municipal-Entity ("ME") clients, but merely a duty of care to "Obligated Person" ("OP") clients (consistent with Dodd-Frank). II. It moves the "engagement letter" regulatory trend forward by imposing a detailed disclosure regime - similar to that for underwriters under existing Rule G-17 - upon MA's. III. It imposes suitability requirements. IV. It flatly prohibits an MA or any control affiliate from acting as a counterparty to ME or OP clients in principal transactions. The no-principal-transactions prohibition seems to far-surpass its fiduciary-duty underpinnings and spurred swift opposition from the broker-dealer community, with SIFMA issuing an opposing statement early the next morning, Friday, January 10. For more information on securities litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.
PartnerTom Potter is a Partner in the firm's Nashville office and has over 35 years of experience representing business interests in securities, corporate and intellectual property disputes.
Tom represents broker-dealers and ...
