MSRB Provides Guidance to Underwriters on Implementation of New Obligations to State and Local Governments

Date: July 18, 2012

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


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published comprehensive implementation guidance to assist underwriters in meeting their newly expanded legal obligations to state and local governments.

Effective August 2, 2012, underwriters of municipal securities are required to disclose to their state and local government clients information about their role in a municipal bond transaction, risks about complex financial transactions, potential conflicts of interest and compensation received from third-party providers of derivatives and other investments, among other new requirements. These expanded obligations, intended to ensure state and local governments have the necessary information to make decisions when undertaking financial transactions, are outlined in an interpretive notice to MSRB Rule G-17 on fair dealing that was approved by the Securities and Exchange Commission on May 4, 2012. The interpretive notice also describes fair dealing responsibilities of underwriters in connection with their representations to issuers and with certain financial aspects of an underwriting.

The new implementation guidance reiterates the principles underlying the interpretive notice and provides practical considerations for underwriters to bear in mind when evaluating their activities and procedures for compliance. 

“The MSRB is providing this guidance to help underwriters in revising their supervisory systems and fully understanding their expanded fair dealing obligations to ensure that important protections for state and local governments are properly implemented,” said MSRB Executive Director Lynnette Kelly.

The implementation guidance supplements other educational materials the MSRB has provided on underwriters’ new obligations to state and local governments.

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.