MSRB Seeks Comment on Disclosure of Payments in Connection with New Issues of Municipal Securities

Date: May 31, 2012

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

Concept Release Requests Public Input on whether Dealers and Advisors Should Disclose on EMMA®
Any Financial Incentives Given or Received 

Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published a concept release seeking comment on a possible proposal to require underwriters and municipal advisors to disclose whether they have made or received certain payments in connection with new issues of municipal securities. 

In the wake of Jefferson County, Alabama, and other situations involving undisclosed financial relationships, concerns have arisen regarding potential conflicts of interest that can impair the ability of municipal market professionals to act fairly and objectively. 

The MSRB is considering whether it should require disclosure through the MSRB’s Electronic Municipal Market Access (EMMA®) website of financial incentives received by underwriters or municipal advisors that may influence their recommendations, as well as payments made by underwriters or municipal advisors to incentivize third parties, including incentives for third parties to steer business toward the underwriter or advisor. The concept proposal is intended to elicit input from the public on potential benefits and burdens of requiring public disclosures of these financial incentives, as well as on potential alternatives, to assist the MSRB in determining whether to publish for further comment a specific rule proposal that would establish such a requirement. 

“The MSRB would appreciate feedback from market participants about whether and how we should take steps to address potential conflicts of interest stemming from undisclosed financial relationships among dealers, advisors and third parties,” said MSRB Executive Director Lynnette Kelly. “This comes at a time when the MSRB is focused on our expanded mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to protect state and local government issuers.” 

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.