Posts tagged Municipal Securities Rulemaking Board.
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;
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Rule G-42The Municipal Securities Rulemaking Board ("MSRB") issued a concept release last month suggesting that market transparency trumps the direct Congressional prohibition against federal regulations requiring filing of information by (or by broker-dealers, from) municipal issuers (the "Tower Amendment").
Regulators are concerned that direct purchases of municipal debt (akin to private placements) and bank loans to municipal entities might avoid the municipal securities regulatory regime, yet affect the priority and integrity of municipal securities:
The MSRB has ...
On April 12, the Tennessee Republican Party filed a petition in the US Sixth Circuit Court of Appeals, seeking to invalidate the SEC's approval of new rules extending the MSRB's long-standing "pay-to-play" prohibitions to new municipal advisors.
The MSRB has prohibited "pay-to-play" practices in the municipal securities space since its Rule G-37 was promulgated in 1994. The Rule does not prohibit political contributions by bond dealers outright, but instead prohibits them from doing business with issuers to who's elected officials a dealer has made political ...
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US Sixth Circuit Court of AppealsOn 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 ...
The SEC recently approved the Municipal Securities Rulemaking Board's ("MSRB") extension to Municipal Advisors ("MA's") of its dealer Rule G-20, restricting gifts in connection with municipal securities. The Rule also updates and consolidates existing guidance and conforms to FINRA's similar requirements in FINRA Rule 3220. The Rule adds a new prohibition against entertainment-expense reimbursement from offering proceeds, Rule G-20(e). In general, the Rule prohibits gifts or services (including gratuities) exceeding $100 per year to any person if they relate to the ...
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Securities Litigation & ArbitrationThe Municipal Securities Rulemaking Board ("MSRB") announced September 2 that it has submitted for SEC approval proposed amendments extending its gift-limitations Rule G-20 to municipal advisors. In general, the Rule prohibits gifts or services (including gratuities) exceeding $100 per year to any person if they relate to the provision of municipal advisory services, with some exceptions, including:
- Normal Business Dealings: Occasional gifts of meals or tickets to events hosted and attended by advisors, or sponsored business functions recognized by the IRS as deductible ...
The Financial Industry Regulatory Authority (FINRA)
announced last week that it is seeking comment on a proposal to create a new academic Trade Reporting and Compliance Engine (TRACE) data set. While academic researchers already use historic TRACE data, the data currently available to researchers does not include identifying information about dealer identities. The new data product, which would be available solely to institutions of higher education, would include masked dealer identities. FINRA's proposal, which is similar to a
proposal recently made by the Municipal ...
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 ...
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 ...
