• Muncipal Advisor "Gifts" Rule Approved By SEC
  • December 1, 2015 | Author: J. Andrew Gipson
  • Law Firm: Jones Walker LLP - Jackson Office
  • On November 6, 2015, the Securities and Exchange Commission ("SEC") approved rule changes filed by the Municipal Securities Rulemaking Board ("MSRB") imposing limitations on business-related gift giving by municipal advisors.

    The amendments to MSRB Rule G-20 will be effective May 6, 2016, and will generally prohibit municipal advisors and their associated persons 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 municipal advisory activities. 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."

    The amendments also specify a number of exclusions to the $100.00 limit, including "reminder advertising" such as transaction commemorative gifts, gifts of de minimis value such as pens and notepads, promotional gifts of nominal value, bereavement gifts, and personal gifts upon occasions such as a wedding or the birth of a child.

    Section (e) of the amended Rule G-20 prohibits a regulated entity from requesting or obtaining reimbursement for certain entertainment expenses from the proceeds of a municipal offering, but permits the customary market practice of reimbursement for "ordinary and reasonable expenses for meals hosted by the regulated entity and directly related to the offering for which the regulated entity was retained." Examples of "entertainment expenses" that may not be reimbursed are tickets to theater, sporting or other recreational spectator events, sightseeing tours, and transportation related to attending such entertainment events.