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Compliance Corner is a quarterly electronic newsletter published by
the MSRB to support the compliance obligations of brokers, dealers and
municipal securities dealers (collectively "dealers") and municipal
advisors. Compliance Corner provides regulatory updates and
resources to facilitate understanding of MSRB rules. Items below labeled “MA” are for municipal advisors; “BD” for dealers;
“MA/BD” for all.
Compliance in Focus
 Gary Hall, MSRB Chair
As a municipal market professional, I appreciate resources that can assist my firm in complying with MSRB rules. And as Chair of the MSRB Board, I am working to ensure that compliance resources produced by the MSRB are meaningful, effective and responsive to identified needs. These principles are being applied to compliance resources developed in conjunction with the new advertising rule for municipal advisors and the amended dealer advertising rule that will be effective in February. Market participants requested resources to assist with rule implementation, and the MSRB is responding.
You will soon see a complete set of compliance resources and interpretive guidance that address municipal advisory client lists and case studies, municipal advisor advertising content standards and the use of social media as it relates to advertising for municipal advisors and dealers. To ensure the usefulness of these resources, we published drafts for public comment and used input received from stakeholders to further refine the information. The valuable insight we received from market professionals, coupled with that from our Compliance Advisory Group, helped the MSRB refine its resources to be more reflective of real-life scenarios. We appreciate this stakeholder input and think the resources have been improved as a result. This type of collaboration can serve as an excellent example of a process that enhances municipal market regulation.
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Watch Gary's "Chair Chat" on supporting dealer and municipal advisor compliance.
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Compliance Frequently Asked Questions (FAQs)
Get answers to commonly asked questions about compliance with MSRB rules.
Q: How can a firm indicate on its website that it is registered with the MSRB?
A: Consistent with Rule A-12(e), a municipal advisor, broker, dealer or municipal securities dealer registered with the MSRB may use the designation “MSRB registered” in advertising, including on its website. The use of designations such as “accredited by” or “qualified with” or “member of” with respect to MSRB registration would be inconsistent with Rule A-12(e) and could be misleading.
Compliance Tip
Under MSRB Rule G-3, municipal advisor firms must, at least annually, deliver CE training to their municipal advisor professionals based on the training needs identified by the particular municipal advisor firm.
As a reminder, if your municipal advisor firm has not conducted its CE training, it should be sure to do so by December 31, 2018.
Review the MSRB's Needs Analysis Checklist and Sample Written Training Plan Template.
Read FAQs on Continuing Education Program Requirements for Municipal Advisors.
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Compliance Calendar
Dealers and municipal advisors should note the following key compliance dates and deadlines relevant through the third quarter of calendar year 2018.
 October 1, 2018–December 31, 2018: Temporary Fee Reduction on Underwriting, Transaction and Technology Fees Assessed on Dealers
Effective October 1, 2018, the rates of assessment for the MSRB’s underwriting, transaction and technology fees under MSRB Rule A-13 will be reduced temporarily by approximately one-third to provide short-term limited relief to dealers. The lower assessment rate will apply only for activity that occurs during the period October 1, 2018–December 31, 2018. Read MSRB Notice 2018-16.
December 31, 2018: Deadline for Continuing Education Needs Analysis
Under MSRB Rule G-3, municipal advisor firms are required to complete a needs analysis, develop a continuing education program for their covered persons and deliver training to all covered persons by December 31, 2018. See MSRB Notice 2017-10.
December 31, 2018: Investor and Municipal Advisory Client Education Notifications
All dealers and municipal advisors must provide a written notification to customers and municipal advisory clients with a statement that they are registered with the MSRB and the U.S. Securities and Exchange Commission (SEC); the MSRB’s website address; and a statement as to the availability of the Information for Municipal Securities Investors and/or Information for Municipal Advisory Clients brochures. This notification must be provided once each year. See MSRB Rule G-10.
December 31, 2018: SEC Form MA Verification
Within 90 calendar days after a municipal advisor firm’s fiscal year end (calendar year end for sole proprietors), the municipal advisor firm must file an “annual update,” which is an amendment to the municipal advisor firm’s SEC Form MA, that either confirms the information is accurate or updates responses to any item for which the information is no longer accurate. See SEC Rule § 240.15Ba1-5.
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 Virtual Workshops
To submit questions in advance of any workshop or to suggest topics for future workshops, email MSRBEvents@msrb.org.
Webinar on Amended SEC Rule 15c2-12 and EMMA® (MA/BD)
January 17, 2019, 3:00–4:00 p.m. ET
During this free webinar, representatives of the MSRB, SEC, NABL and GFOA will discuss the February 2019 amendments to the SEC Rule 15c2-12 on municipal securities disclosure and related changes to the Electronic Municipal Market Access (EMMA®) website.
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Compliance Outreach Program for Municipal Advisors (MA)
February 7, 2019, 8:00–4:00 p.m. PT
During this open forum in San Francisco, representatives from the MSRB, the Financial Industry Regulatory Authority (FINRA) and the SEC will discuss regulatory and compliance issues with municipal advisory industry professionals. View the agenda.
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Enforcement Insight
This periodic feature summarizes a recent enforcement matter brought by an examining authority, which includes the SEC, FINRA or applicable bank regulator, relevant to the municipal securities market. Enforcement matters can, when applicable, inform firms and help identify potential compliance risks. Read about the MSRB’s regulatory coordination and enforcement support.
On October 29, 2018, the SEC released its Opinion, In the Matter of Thaddeus J. North, For Review of Disciplinary Action Taken by FINRA. The SEC upheld a FINRA disciplinary action finding that Mr. North violated FINRA and NASD rules and MSRB Rule G-27 on supervision and the imposition of a 30-business-day suspension in all principal capacities and a $10,000 fine. During the period in question, Mr. North was the CCO of a broker-dealer and, pursuant to the firm’s written supervisory procedures (WSPs), he had responsibility to review the firm’s electronic communications, including e-mails, Bloomberg messages, and Bloomberg chats. The WSPs were found to be deficient because they failed to identify basic parameters for the review of electronic communications, including “e.g., the frequency of review, the methodology to be used in selecting communications to be reviewed, whose electronic communications were going to be reviewed, the number of communications to be reviewed and how to document actions taken as a result of reviews.” Mr. North not only failed to conduct sufficient reviews of electronic correspondence, but he also failed to remedy any of the deficiencies in the WSPs as the CCO. In addition, the SEC found that Mr. North did not report to FINRA that a representative of the firm entered into a business relationship with a statutorily disqualified person.
Finally, the SEC recognized that Mr. North was not the only person at the firm whose performance may have been deficient with respect to review of electronic communications and WSPs, but that the record in the case did not indicate actions taken by the firm’s Chief Executive Officer (CEO). The SEC stated that the CEO’s supervisory responsibilities include an implicit duty to follow up and review that this authority is being properly exercised. The SEC further stated that firms will be held responsible for ensuring compliance and in some cases, it may be more appropriate to hold the firm, rather than the compliance officer, liable for violations. Read more.
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Coming Soon
Municipal Advisor Principal Qualification Examination (Series 54)
Development is underway for the Series 54 exam—a principal-level examination for municipal advisor professionals defined under MSRB Rule G-3 as municipal advisor principals. The rule defines a municipal advisor principal as a person associated with a municipal advisor who is qualified as a municipal advisor representative and is directly engaged in the management, direction or supervision of the municipal advisory activities of the municipal advisor and its associated persons.
The MSRB is launching its pilot Series 54 exam in February 2019. When the permanent version of the exam is launched in fall 2019, municipal advisor principals will be required to pass the exam within 12 months. The MSRB will provide regular communications regarding the formalization of professional qualification requirements for municipal advisor principals, as well as information on the Series 54 pilot and permanent exam.
The enrollment period for the Series 54 pilot exam is just 12 days, from February 4-15, 2019. Once enrolled, pilot participants will be able to take the exam between February and June. Any individual who takes and passes the pilot exam during this period will be appropriately qualified as a municipal advisor principal once the permanent exam is available.
Interested in taking the pilot exam? Fill out this questionnaire to receive information and updates on pilot enrollment.
Types of Compliance Information
A fair and efficient municipal securities market benefits from all participants sharing a common understanding of the rules governing the conduct of brokers, dealers and municipal securities dealers (collectively, “dealers”) and municipal advisors. Rules are developed in a transparent and participatory rulemaking process. The MSRB provides ongoing compliance information to supplement understanding of these rules by dealers and municipal advisors. The MSRB also engages in various market leadership activities in support of its mission to protect the integrity of the municipal securities market.
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Regulatory Roundup
Keep up with current requests for comment, updated regulatory requirements and upcoming rule filings, and learn about opportunities to provide input at various stages of the MSRB’s rulemaking process.
December 12, 2018:SEC Approval Order on Proposed Rule Change Concerning Certain Data Elements on Form G-45 under MSRB Rule G-45, on Reporting of Information on Municipal Fund Securities.
December 7, 2018: SEC Filing on Proposed Rule Change to the MSRB's Facility for the Electronic Municipal Market Access System (EMMA).
November 27, 2018: Federal Register Notice of Approval on Proposed Rule Change to Amend MSRB Rule G-3, on Professional Qualification Requirements, to Require Municipal Advisor Principals to Become Appropriately Qualified by Passing the Municipal Advisor Principal Qualification Examination.
November 20, 2018: SEC Approval Order on Proposed Rule Change to Amend MSRB Rule G-3, on Professional Qualification Requirements, to Require Municipal Advisor Principals to Become Appropriately Qualified by Passing the Municipal Advisor Principal Qualification Examination.
November 16, 2018: MSRB Response to Comments on Proposed Rule Change to Amend MSRB Rule G-3, on Professional Qualification Requirements, to Require Municipal Advisor Principals to Become Appropriately Qualified by Passing the Municipal Advisor Principal Qualification Examination
November 16, 2018: Request for Comment on Draft Amendments to 2012 Interpretive Notice Concerning the Application of MSRB Rule G-17 to Underwriters of Municipal Securities. Comment due by January 15, 2019.
November 2, 2018: Federal Register Notice of Filing on Proposed Rule Change Concerning Certain Data Elements on Form G-45 under MSRB Rule G-45, on Reporting of Information on Municipal Fund Securities.
October 15, 2018: SEC Filing on Proposed Rule Change Concerning Certain Data Elements on Form G-45 under MSRB Rule G-45, on Reporting of Information on Municipal Fund Securities.
October 9, 2018: Federal Register Notice of Filing on Proposed Rule Change to Amend MSRB Rule G-3, on Professional Qualification Requirements, to Require Municipal Advisor Principals to Become Appropriately Qualified by Passing the Municipal Advisor Principal Qualification Examination.
September 19, 2018: SEC Filing on Proposed Rule Change to Amend MSRB Rule G-3, on Professional Qualification Requirements, to Require Municipal Advisor Principals to Become Appropriately Qualified by Passing the Municipal Advisor Principal Qualification Examination.
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