• MSRB Withdraws Proposed Municipal Advisor Rules Previously Filed With the SEC
  • September 20, 2011 | Authors: Amy Natterson Kroll; Paul M. Tyrrell
  • Law Firms: Bingham McCutchen LLP - Washington Office ; Bingham McCutchen LLP - Boston Office
  • Recently, the MSRB filed numerous proposed rules for municipal advisors regarding pay to play, fiduciary duty, fair dealing, supervision, gifts and assessment.

    On Friday, September 9, the MSRB withdrew these filings and in a notice today stated that "given substantial concern regarding the timing of a permanent municipal advisor definition, the MSRB is delaying its proposed rules on fiduciary duty, pay to play, fair dealing, supervision, gifts and assessments until the SEC adopts a permanent definition under the Securities Exchange Act of 1934."1

    The MSRB's Notice also stated that the MSRB is "...concerned that because the [Municipal Advisor] definition has not been finalized, some firms and individuals will not participate in the SEC comment process on the MSRB proposals." Moreover, in its Notice, the MSRB informed firms that its rulemaking process for municipal advisors will continue and that “...[o]nce municipal professionals have certainty from the SEC regarding who is covered by the MSRB rules, the MSRB’s rule proposals will be resubmitted to the SEC for approval.”

    Conclusion

    The MSRB had requested in its original rule filings with the SEC that its various proposed rules and rule changes be made effective on the date that SEC rules defining the term "municipal advisor" under the Exchange Act first become effective or on such later date as the proposed rule change is approved. Today's announcement fundamentally changes the MSRB's timing. The MSRB’s rule proposals will be re-filed with the SEC after the SEC's rules are final. Firms will then know if they will be impacted by the MSRB's proposals and those impacted will be strongly urged to comment on the MSRB's proposals at that time.

     


     

    ENDNOTES
    1 See MSRB Notice 2011-15, dated September 12, 2011 (the “Notice”). Specifically, the Notice provides that on September 9, 2011, the Municipal Securities Rulemaking Board (MSRB) withdrew the following municipal advisor rule proposals, which were pending with the Securities and Exchange Commission (the “SEC”):

    • SR-MSRB-2011-08 (July 26, 2011) (Proposed New Rule A-11, on Municipal Advisor Assessments, and New Form A-11-Interim);
    • SR-MSRB-2011-10 (August 16, 2011) (Proposed Rule Change Consisting of Amendments to Rule G-20, on Gifts and Gratuities, Rule G-8, on Books and Records, and Rule G-9, on Preservation of Records, and to Clarify that Certain Interpretations by FINRA and NASD Would Be Applicable to Municipal Advisors);
    • SR-MSRB-2011-12 (August 19, 2011) (Proposed Rule Change Consisting of Proposed New Rule G-42, on Political Contributions and Prohibitions on Municipal Advisory Activities; Proposed Amendments to Rules G-8, on Books and Records, G-9, on Preservation of Records, and G-37, on Political Contributions and Prohibitions on Municipal Securities Business; Proposed Form G-37/G-42 and Form G-37x/G-42x; and a Proposed Restatement of a Rule G-37 Interpretive Notice);
    • SR-MSRB-2011-14 (August 23, 2011) (Proposed Rule Change Consisting of Proposed Rule G-36, on Fiduciary Duty of Municipal Advisors, and a Proposed Interpretive Notice Concerning the Application of Proposed Rule G-36 to Municipal Advisors); and
    • SR-MSRB-2011-15 (August 24, 2011) (Proposed Interpretive Notice Concerning the Application of Rule G-17, on Conduct of Municipal Securities and Municipal Advisory Activities, to Municipal Advisors).

    In the Notice, the MSRB stated that SR-MSRB-2011-13 (August 22, 2011) (Proposed Rule Change Consisting of Proposed New Rule G-44, on Supervision of Municipal Advisory Activities, along with Related Proposed Amendments to Rule G-8, on Books and Records, and Rule G-9, on Preservation of Records) was already undergoing revision and will not be re-filed at this time.