MSRB Testifies in US Senate Hearing on Enhanced Investor Protection After the Financial Crisis

Date: July 12, 2011

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


Alexandria, VA - The Municipal Securities Rulemaking Board (MSRB) testified today in a hearing before the U.S. Senate Committee on Banking, Housing and Urban Affairs to discuss enhanced investor protection after the financial crisis.

July 21, 2011 will mark the one year anniversary of the signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which expanded the MSRB’s mission to include the protection of municipal entities and obligated persons, as well as its jurisdiction to include the regulation of municipal advisors.

MSRB Executive Director Lynnette Kelly Hotchkiss emphasized to the Committee the importance of the municipal securities market. “I don’t need to tell those of you who have served in state or local office just how important the municipal bond market is to the health and continued vitality of our states, cities, towns and counties.”

Hotchkiss told the Committee, “Like every market, transparency and disclosure are critical to protecting investors, and our free online resource, called EMMA, does exactly that. EMMA provides investors with free access to disclosures and pricing data – information they need in order to make informed investment decisions.” In 2010, the MSRB’s EMMA website received an average of 19 million page views per month.

Hotchkiss noted that Congress gave the MSRB the authority to regulate swap advisors to state and local governments and said the events of Jefferson County, Alabama “made it very clear that the municipal derivatives market needed vast improvement. The MSRB has already taken significant steps in this area by ensuring that state and local governments are given impartial professional advice by qualified advisors and by ensuring that underwriters that recommend swaps explain all risks in clear language that everyone can understand.” 

Hotchkiss addressed the recent fraudulent bidding practices by municipal market professionals alleged by the Securities and Exchange Commission and other federal and state authorities. She said these activities would be a violation of MSRB fair practice and fiduciary duty rulemaking initiatives undertaken since the passage of the Dodd-Frank Act.

Hotchkiss concluded her testimony by saying, “The MSRB is dedicated to ensuring that municipal market regulations and the transparency afforded by our EMMA system promote an open, fair and efficient market; one that protects issuers and investors alike; and one that continues to fund the critical public infrastructure needs of our country.”

Access the MSRB’s written testimony submitted to the Committee.

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 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.