- Proposed Rule Filed Applying "Gifts" Rule to Municipal Advisors
- September 11, 2015 | Author: J. Andrew Gipson
- Law Firm: Jones Walker LLP - Jackson Office
- On September 2, the Municipal Securities Rulemaking Board ("MSRB") filed a proposed rule change with the Securities and Exchange Commission that would apply to municipal advisors limitations on business-related gift giving currently applicable to other municipal securities professionals under MSRB Rule G-20.
In its prior form, MSRB Rule G-20 generally prohibits a broker, dealer, or municipal securities dealer from giving directly or indirectly any thing or service of value, including gratuities, in excess of $100.00 (the "$100.00 limit") per year to a person, if such payments or services are in relation to the municipal securities activities of the employer of the recipient. This limitation does not apply to gifts considered to be "normal business dealings," such as meals and sports and entertainment tickets, so long as such gifts are "not so frequent or so extensive as to raise any question of propriety."
In summary, the filed amendments to Rule G-20 would extend the relevant existing provisions of the rule to municipal advisors and their associated persons and to gifts given in relation to municipal advisory activities. The amendments would also consolidate and codify interpretive guidance, including interpretive guidance published by the Financial Industry Regulatory Authority, Inc. ("FINRA") and adopted by the MSRB. In addition, the amendments include a provision to prohibit the seeking or obtaining of reimbursement by a regulated entity of certain entertainment expenses from the proceeds of an offering of municipal securities.
Among the exceptions to the $100.00 limit included in the filed rule are transaction commemorative gifts, de minimus gifts, promotional gifts, bereavement gifts, and personal gifts given in connection with infrequent life events.