Date: July 5, 2011
Contact: Jennifer A. Galloway, Chief Communications Officer
Alexandria, VA − The Municipal Securities Rulemaking Board (MSRB) today expressed concern that some municipal advisor firms engaging in municipal advisory activities may not be registered both with the MSRB and the Securities and Exchange Commission (SEC). Unregistered municipal advisor firms providing municipal advisory services may be in violation of federal securities laws and MSRB rules if they are not registered as municipal advisors with both regulatory organizations.
Unregistered municipal advisory firms may be unaware that they – and individuals associated with them – owe a federal fiduciary duty to municipal entity clients for whom they provide municipal advisory services. The MSRB encourages municipal entities and obligated persons that retain municipal advisor firms to verify their registration status with the MSRB and the SEC.
“It has come to our attention that some municipal advisors are providing municipal advisory services without first registering with the SEC and MSRB, as required by law,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “The MSRB is concerned that these firms may not be aware of their legal obligations, including the federally established fiduciary duty owed their municipal entity clients.”
Firms engaged in municipal advisory activities were required to be registered with the MSRB as of December 31, 2010 as a result of the MSRB’s expanded regulatory authority over municipal advisors established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Prior to registering with the MSRB, municipal advisors must register with the SEC. In addition, brokers, dealers and municipal securities dealers that also act as municipal advisors are required to register with both regulators as municipal advisors even if they previously registered with the MSRB as dealers.