Date: August 1, 2011
Contact: Jennifer Galloway
MUNICIPAL SECURITIES RULEMAKING BOARD HOLDS QUARTERLY BOARD MEETING
Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) held its quarterly Board of Directors meeting July 27-29, 2011 in Colorado Springs, CO where it completed developing the initial set of core rules of conduct for municipal advisors.
The Board also approved a plan for effective dates of rule proposals issued earlier this year. Those proposals depend on publication by the Securities and Exchange Commission of a permanent definition of who is a municipal advisor and is therefore subject to MSRB rules.
“The MSRB has fulfilled the first phase of the mission it was given by Congress under the Dodd-Frank Wall Street Reform and Protection Act,” said MSRB Chair Michael G. Bartolotta. “Since the effective date of the Dodd-Frank Act, the MSRB has diligently developed a core set of rules of conduct for municipal advisors that will fundamentally change the municipal market for the better.”
Since October 1, 2010, the MSRB has been proposing rules for municipal advisors covering themes that are central to the activities of advisors and their work on behalf of state and local governments. These include rule proposals on fiduciary duty, fair dealing, conflicts of interest and supervision. Final versions of the proposals require approval by the Securities and Exchange Commission.
At its meeting, the Board agreed to publish for public comment a new rule proposal that would require municipal advisors to provide written documentation of their municipal advisor engagements. The goal is to disclose in the documentation information state and local governments and other municipal entities need to have to make informed decisions, including the basis of compensation, the scope of services, any manageable conflicts of interest and whether any affiliates of the municipal advisor provide advice or services related to the municipal advisor engagements.
The Board also approved publishing for public comment an extension of its advertising rule to municipal advisors, which would require advertising by municipal advisors of their skills and services not to be false and not materially misleading.
“Truthful advertising and disclosure of key information for municipal entities are fundamental practices needed to ensure that state and local governments hiring municipal advisors can make the best possible decisions about those engagements,” said Chair Bartolotta. The MSRB will publish formal requests for comment on the two proposals within the next few weeks, and a plan for effective dates of existing rule proposals later this week.
The Board also approved amendments to its proposal to apply its gifts rule to municipal advisors and plans to file the proposal with the SEC in the near future.
The Board approved a budget for the fiscal year that begins October 1, 2011 that accounts for the MSRB’s continued transition to a broader market regulator and its operation of market information systems essential to market transparency. The fiscal year 2012 budget also continues the move toward more diversified revenue sources and plans for historically lower bond volume in fiscal 2012. The Board also elected new officers and five new members, whose names will be announced later this month.
In keeping with the MSRB’s outreach efforts over the past year, the MSRB held a seminar in Denver for more than 80 municipal market professionals – the sixth such event around the country to communicate about the MSRB’s activities.