|
Over
the coming months, municipal advisors are required to comply with several new
standards of conduct established by the MSRB and to continue to obtain
professional qualifications in order to advise state and local governments on
public finance decisions. This regulatory framework, established under the
Dodd-Frank Wall Street Reform and Consumer Protection Act, seeks to ensure municipal entities and the taxpayers that support them are protected from, among other things, fraud, manipulation and conflicts of interest.
Standards
of Conduct
The cornerstone of the MSRB’s regulatory framework for municipal advisors is
MSRB Rule G-42, on duties of non-solicitor advisors, which takes effect June
23, 2016.This rule addresses specific duties of care and loyalty that are
components of the federal fiduciary duty established under the Dodd-Frank Act
for municipal advisors when dealing with municipal entity clients. View Rule
G-42
to learn more about required disclosure of conflicts of interest, documentation
of the advisory relationship, recommendations of transactions or products and
specified prohibitions.
Market
Integrity
As of August 17, 2016, municipal advisors will be subject to amendments to MSRB Rule
G-37
on political contributions that extend the MSRB’s well-established municipal
securities dealer pay-to-play rule to municipal advisors, including those
acting as third-party solicitors. This important rule will support integrity of
the municipal market and help ensure that municipal advisory business is
awarded on the basis of merit. View the
revised rule
to understand the new provisions that apply to municipal advisors related to
municipal advisory business and contributions to certain officials of municipal
entities.
Amendments to another rule, MSRB Rule
G-20,
will limit the size and nature of gifts given by municipal advisors in their
professional capacity advising state and local governments. Effective May 6,
2016, the changes will address conflicts of interest that may arise from
gift-giving in connection with municipal advisory activities.
Emphasis
on Education
As
advisors implement these important new regulations, the MSRB is shifting its primary
focus from creating rules to supporting rule compliance. The MSRB will continue
to add to its library of online resources and webinars to help municipal
advisors understand their regulatory obligations. Resources include a recording
of a live compliance outreach program for municipal advisors recently co-hosted by
the MSRB, Securities and Exchange Commission and Financial Industry Regulatory
Authority.
In preparation for
the development of a permanent qualification exam for municipal advisors, more
than 1,600 municipal advisor professionals representing over 350 firms took the
pilot Municipal Advisor Representative Qualification Examination (Series 50) In
January and February 2016. These volunteer test-takers will help determine the
passing score and validate the question bank for the permanent Series 50 exam,
which the MSRB expects to launch in the fall of 2016. The MSRB’s Series 50 exam
is the first qualifying examination for municipal advisors. Read more
about the development of the Series 50 exam.
|
