MSRB to Delay Municipal Advisor Rule Proposals

Date: September 12, 2011

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

MSRB TO DELAY MUNICIPAL ADVISOR RULE PROPOSALS

Alexandria , VA The Municipal Securities Rulemaking Board (MSRB) today announced that it is delaying its municipal advisor rule proposals currently before the Securities and Exchange Commission (SEC).

Since being given regulatory jurisdiction over municipal advisors on October 1, 2010, the MSRB has been seeking to provide clarity to the municipal advisors registered under the SEC’s temporary registration rule by advancing a core set of rules. However, given substantial concern regarding the timing of a permanent municipal advisor definition, the MSRB is delaying its proposed rules on fiduciary duty, pay to play, fair dealing, supervision, gifts and assessments until the SEC adopts a permanent definition under the Securities Exchange Act of 1934.

The MSRB has a statutory mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to protect municipal entities and regulate municipal advisors. The MSRB has sought to fulfill its Congressional mandate by soliciting broad input, issuing draft rules, seeking public comment and proposing core municipal advisor rules. Before the MSRB proposed its rules, it took into account the potential breadth of the definition of municipal advisor under the SEC proposal. However, the MSRB is concerned that because the definition has not been finalized, some firms and individuals will not participate in the SEC comment process on the MSRB proposals.

“We want to make sure that all potential municipal advisors are on notice that they could be affected by our rule proposals and have an opportunity to participate fully in the SEC comment process,” said MSRB Executive Director Lynnette Kelly Hotchkiss.

The MSRB’s rulemaking process for municipal advisors will continue. Once municipal professionals have certainty from the SEC regarding who is covered by the MSRB rules, the MSRB’s rule proposals will be resubmitted to the SEC for approval.

The MSRB will act promptly once the SEC finalizes its definition of municipal advisor to ensure that there is a fair and level playing field for all municipal professionals and that the MSRB promotes issuer protection through the elimination of pay to play and establishing rules of conduct.

“We are committed to fulfilling our Dodd-Frank responsibilities through careful and deliberate rulemaking,” Hotchkiss said. “We will continue to carry out this work to ensure that municipal advisors have clear guidance about their obligations under federal law.”


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 Congressionally-chartered, 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 subject to oversight by the Securities and Exchange Commission.