MSRB FINRA Issue Joint Investor Education Notice

Date: June 30, 2009

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


Risks and Other Investment Consideration Are Reviewed

Alexandria, VA -The Municipal Securities Rulemaking Board (MSRB) and the Financial Industry Regulatory Authority (FINRA) today issued a joint notice with information about municipal bonds for investors.  MSRB and FINRA are issuing the notice to remind investors of several fundamental factors that should be taken into consideration when investing in municipal securities.   The notice contains a reminder that, while municipal bonds have historically been considered relatively conservative investments, they do, like all bond investments, carry risk, and that investors should carefully evaluate each investment.

The notice emphasizes the importance of examining and evaluating information included in bond disclosure documents, as well as information about credit ratings and bond insurance that may apply to individual issues. The notice also recommends that investors obtain up-to-date information about individual bonds and their issuer, research made possible with the MSRB's Electronic Municipal Market Access (EMMA) website at  EMMA provides free, electronic access to municipal bond disclosure information, real-time prices for municipal bonds, educational materials and other useful information.

Official statements, available for free on EMMA for most bonds issued since 1990, are similar to a prospectus for a corporate bond and describe the essential terms and features of municipal bonds.  Investors can learn, for example, about the terms under which bonds can be redeemed prior to maturity, the sources pledged to repay the bonds and the consequences of a payment or non-payment default by the issuer.

Continuing disclosure documents - ongoing financial information about a bond issuer such as quarterly financial statements, budgets and changes in accounting standards - also provide important insight about an issuer's ability to repay its debt.  Beginning July 1, 2009, these documents will be collected from issuers and published on EMMA, making them easily and freely available to investors for the first time.

Investors can also evaluate trade prices for recent and comparable bonds on EMMA.  The relationships among interest rate, price and yield, and any special conditions of a trade on EMMA are important in understanding bond values.

EMMA's Education Center also has additional information geared toward retail investors that can help them better understand their investments, as well as the documents and data on EMMA.

The MSRB and FINRA work in coordination to ensure investor protection in the municipal securities market.  As part of these coordinated efforts, the MSRB expects to use the results of the retail sales practices sweeps announced by FINRA today to assist the MSRB in its on-going rulemaking and information services activities.  The MSRB establishes fair practice, disclosure and other rules that securities firms and banks must follow when engaging in municipal securities transactions and also operates information services such as EMMA to further the MSRB's investor protection mission.  FINRA (along with the SEC and the various federal banking regulators) examines such firms for compliance with and enforces MSRB rules.

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.