MSRB Provides Update on Underwriter Fair Dealing Proposal

Date: December 9, 2011

Contact: Jennifer A. Galloway, Chief Communications Officer
             (703) 797-6600


The MSRB announced today that the Securities and Exchange Commission (SEC) is seeking additional time to consider its proposal regarding the duties of underwriters to state and local government issuers under the MSRB’s “fair dealing” rule. The proposal would for the first time establish detailed obligations of underwriters of municipal securities to their state and local government clients regarding clear disclosure of risks and conflicts of interest, among other things.

The proposal was published in the Federal Register on September 9, 2011, and an amendment to the proposal was published on November 21, 2011. Under federal law, the SEC had 90 days from September 9 to approve or disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change. The 90-day period ended December 8, 2011.

On December 9, 2011, the SEC published a notice and order to institute proceedings pursuant to Section 19(b)(2)(B) of the Securities Exchange Act to determine whether to approve or disapprove the MSRB’s proposed rule change. In its notice, the SEC said that the institution of the proceedings does not indicate it has reached any conclusions with respect to the proposed rule change, or that it will ultimately disapprove the proposed rule change. The SEC is however seeking additional input from interested parties on the issues presented by the proposed MSRB rule change.

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.