Compliance Tip of the Week 2018
(A weekly newsletter providing compliance tips for regulated entities):
December 17, 2018: Share Your Input on MSRB Rule G-17
As the year comes to a close, you're not the only one reflecting on the past. As part of our retrospective rule review, we are currently seeking comments on draft amendments to 2012 interpretive guidance on the application of MSRB Rule G-17, on conduct of municipal securities and municipal advisory activities. Read the notice.
Comments are due by January 15, 2019.
December 10, 2018: 'Tis the Season
It’s not just the season for holiday cards, it may also be the season for giving your customers and/or clients the annual information required under MSRB Rule G-10 on regulatory protections for customers and municipal advisory clients.
December 3, 2018: Market Transparency is a Collaborative Effort!
The MSRB’s Electronic Municipal Market Access (EMMA®) website provides free public access to objective municipal market information and interactive tools for regulated entities, investors and others. To foster market transparency, entities that submit disclosure documents to EMMA® are required to submit documents in a word-searchable PDF format. Read more.
November 26, 2018: This Cyber Monday, Think Before You Click
Although the MSRB's MuniEdPro® Cyber Monday sale is the real deal, not every email offer is. Cybercriminals often use current topics, like Cyber Monday sales, to improve the likelihood that a recipient will click a link that may be a phishing scam or contain malicious software. Spammers and scammers often use URLs with typos and transposed letters in them that are easy to overlook, such as “MSRBoard.” Stay diligent this holiday season and think before you click.
Log into MuniEdPro® to take advantage of the Cyber Monday sale.
November 19, 2018: How's Everyone Getting to the Thanksgiving Table?
Are your friends and family flying into town? Are they driving over?
Chances are high that they will see municipal bonds at work, so why not invite EMMA® over too!
Watch this short educational video, EMMA 101: An Overview for Municipal Bond Investors, to learn how to use the EMMA® website to find infrastructure and other projects in your community.
November 12, 2018: Preparing for Continuing Education (CE) Annual Training
Under MSRB Rule G-3 , municipal advisor firms must, at least annually, deliver CE training to their municipal advisor professionals based on the training needs identified by the particular municipal advisor firm.
As a reminder, if your municipal advisor firm has not conducted its CE training, it should be sure to do so by December 31, 2018.
Review the MSRB's Needs Analysis Checklist and Sample Written Training Plan Template.
Read FAQs on Continuing Education Program Requirements for Municipal Advisors.
November 5, 2018: Share Your Input on Market Benchmarks
Submit your comments to the MSRB regarding the accessibility, methodology and utility of indices, yield curves and other benchmarks currently available in the municipal market. The MSRB is obtaining information and insight from market participants to better inform its mission to promote market transparency. This request is not a precursor to future rulemaking. Read the request for information and share your input by November 27, 2018.
October 29, 2018: Webinar on New MSRB Rule G-40 and Amended Rule G-21
Join the MSRB on Thursday, November 8, 2018 from 3:00 p.m. to 4:00 p.m. ET for a discussion about key provisions of amended MSRB Rule G-21, on advertising by municipal securities dealers, and new MSRB Rule G-40, on advertising by municipal advisors. Register here.
October 22, 2018: G-37 Trick or Treat!
Don’t be startled, but the MSRB Rule G-37 quarterly disclosure submission deadline is sneaking up on you. The filing deadline is October 31, 2018.
Need a treat to help with the deadline? Read about the new submission process in the MSRB's most recent Compliance Corner newsletter.
October 15, 2018: Temporary Reduction on Fee Rates
Did you know that the MSRB temporarily reduced by about a third, fee rates assessed on underwriting, transaction and technology activity from October to December this year? The reduction under MSRB Rule A-13 is providing short-term, limited relief to dealers. Assessment rates will revert to regular levels effective January 1, 2019. Read the notice for more information.
October 8, 2018: Sophistication May Not Be Timeless
Have your clients indicated that they are Sophisticated Municipal Market Professionals (SMMPs)? From time to time, consider reviewing your SMMP customers’ affirmations related to exercising independent judgement and the ability to access material information. While an annual review is not required, this practice may provide a basis to continue to reasonably conclude that a customer is an SMMP. See MSRB Rule G-48.
October 1, 2018: Understanding the New Securities Industry Essentials (SIE) Exam
As of today, October 1, 2018, the Financial Industry Regulatory Authority’s (FINRA) Securities Industry Essentials (SIE) Examination is a prerequisite for the Municipal Securities Representative Qualification Examination (Series 52). The Series 52 has been revised into a specialized knowledge examination. Read about the amendments to MSRB Rule G-3.
September 24, 2018: PQ Pop Quiz
Question: If there is an active Form MA-I on file at the U.S. Securities and Exchange Commission (SEC) for an individual associated with a municipal advisory firm, what must also be true?
Answer: The individual has passed the MSRB Series 50 Examination .
As of September 13, 2017, an individual is required to pass the MSRB’s Municipal Advisor Professional Qualification Examination prior to engaging in municipal advisory activities on behalf of a municipal advisor. SEC FAQs indicate that firms must amend the Form MA-I of an associated person of a municipal advisor who has not taken and passed the Series 50 exam. Read MSRB Series 50 FAQs.
September 17, 2018: Hone Your Bond Pricing Skills with MuniEdPro®
Take advantage of MuniEdPro®’s limited-time sale! Enroll in “Pricing of Municipal Bonds through the Negotiated Sales Process” and “Pricing of Municipal Bonds through the Competitive Sales Process” and receive a third course, “The Decision to Borrow,” for free. Courses are eligible for CPE and CPLP credits. This offer expires September 30, 2018.
September 10, 2018: Join a Compliance Workshop on Completing Form G-37
It’s election season and a good time to get reacquainted with the Form G-37 submission process. Join MSRB staff this Friday, September 14, 2018 from 12:30 – 1:30 p.m. ET for a compliance workshop on key provisions of MSRB Rule G-37, on political contributions and prohibitions on municipal securities business and municipal advisory business, followed by a walk through of the new Form G-37 submission process. The workshop will follow a question-and-answer format based on questions and suggestions from regulated entities and other stakeholders. Register for the workshop.
September 4, 2018: Back to School and Time to Educate the MSRB
The MSRB recognizes the value of the varied perspectives of municipal market participants and is hoping to receive your insight this September to inform its analysis on the following:
- September 14, 2018: Draft Frequently Asked Questions Regarding Use of Social Media under MSRB Advertising Rules
- September 17, 2018: Draft Amendments to MSRB Rules on Primary Offering Practices
Read all open requests for comment on the MSRB’s website here.
August 27, 2018: It’s Election Season: Remember Your Political Contribution Disclosure Obligations
This election season, don’t forget that MSRB Rule G-37, on political contributions, applies to non-de minimis contributions to “officials of a municipal entity.” This general principle applies even when the contribution is given to a sitting official of a municipal entity seeking election for federal office. For example, a municipal finance professional or municipal advisor professional residing in a state in which a municipal entity official is campaigning for a state-wide federal office may not contribute more than $250 per election to the official’s campaign (assuming that the official has selection influence over the type of business in which the firm engages) without causing a ban on municipal securities business or municipal advisory business with that municipal entity.
Not sure if a specific individual is an official of a municipal entity? Consult the “official of a municipal entity” definition in Rule G-37 or access additional compliance resources related to Rule G-37 under the Access Compliance Resources tab on the MSRB website. Be sure to consult the sub-parts of the “official of a municipal entity” definition as contributions to certain types of municipal entity officials may have consequences for your firm, while contributions to other types may not, depending on the type of business in which your firm engages.
August 20, 2018: Submission Deadline Reminder for 529 Plan and ABLE Program Underwriters
Underwriters of 529 savings plans or ABLE programs, or their agents, must make certain submissions to the MSRB under MSRB Rule G-45. Submissions must be made by August 29, 2018 through MSRB Form G-45, for the reporting period ending June 30, 2018. This is the first submission deadline for ABLE program submissions. Read MSRB Notice 2016-20 for more details.
August 13, 2018: Q&A on Supervisory and Compliance Obligations of MAs
In case you missed it, read answers to questions addressed during the MSRB compliance workshop conducted on May 24, 2018 to enhance understanding of the provisions of MSRB Rule G-44, on supervisory and compliance obligations of municipal advisors.
August 6, 2018: Cybercriminals Can Profit from Your Deal
Stay vigilant! Cybercriminals aren’t interested in municipal bonds for the public interest, they want to steal the closing funds. To that end, a cybercriminal will cast a wide net by sending phishing emails to multiple contacts at organizations involved in the deal, including issuers, municipal advisors, underwriters and bond counsel, hoping for just one person to take the bait and unknowingly give the cybercriminal access to an organization’s systems. Once in, the cybercriminal can view internal calendars and contact information for upcoming deal closings. As a closing nears, the cybercriminal can send a sophisticated and well-timed email from a fake account with new wiring information that will, unless detected, allow the cybercriminal to steal the funds.
Read more about avoiding closing scams from the Consumer Financial Protection Bureau.
July 30, 2018: Share Your Input on Underwriters’ Disclosures to Issuers
Submit your comments on the MSRB’s review of its interpretive guidance addressing the application of the MSRB’s fair-dealing rule to underwriters of municipal securities. The guidance, adopted in 2012, requires underwriters to disclose to issuers, among other information, the nature of their underwriting relationship, conflicts of interest and material aspects of the financing transaction. Read the request for comment and share your input by August 6, 2018.
July 23, 2018: Summertime and Disclosure Submission is Easy
Reminder: The deadline to submit quarterly disclosures about your municipal securities or municipal advisory business and any related political contributions under MSRB Rule G-37 is Tuesday, July 31, 2018. Read the manual on how to submit disclosures to the MSRB using electronic Form G-37.
July 16, 2018: Clarifying Case Studies and Client Lists for MAs
Submit your feedback on the MSRB’s draft answers to frequently asked questions related to municipal advisory client lists and case studies under new MSRB Rule G-40 on advertising by municipal advisors. Help ensure the FAQs include relevant examples to illustrate the potential application of MSRB rules. Read the request for comment and share your input by Friday, July 27, 2018.
July 9, 2018: Understand the Evolution of MSRB Rules
Municipal advisors and municipal securities dealers can easily access rule approval orders and see the amendment history for each MSRB rule. Visit the "Rules and Guidance" section of the homepage and select any MSRB rule. Then click on the “Amendment History” tab to follow the evolution of the rule. Each MSRB rule features links to approval orders for rule amendments for the past 13 years. Here you will also find the rule’s file number, which is helpful for anyone interested in searching the entire rule record.
July 2, 2018: Participate in the Rulemaking Process
Share your input regarding the MSRB’s draft proposal to re-establish a standalone rule governing the handling of transactions in discretionary accounts—those customer accounts in which a dealer is authorized to determine what municipal securities will be purchased or sold. Read the request for comment and submit your response by Monday, July 16, 2018.
June 25, 2018: School’s Out but Don’t Toss Your Books and Records!
School is out and summer is here. It’s time to clean out those lockers and dust off your beach gear, but don’t throw away your books and records! This may be a good time to review your books and records being maintained and preserved under MSRB Rules G-8 and G-9 and look for anything that might need to be updated or revised. It’s also a good idea to check if some items in record have been held for the required period of time.
June 18, 2018: Join a Compliance Workshop on Making Disclosures to Issuers
Register to attend the next virtual compliance workshop! Join MSRB staff this Friday, June 22, 2018 from 12:30 – 1:30 p.m. ET for an in-depth discussion about interpretive guidance issued under MSRB Rule G-17 related to underwriters' fair-dealing and disclosure obligations to issuers. The workshop will follow a question-and-answer format based on questions and suggestions from regulated entities and other stakeholders. Register for the workshop.
June 11, 2018: Suitable for Seniors – What’s in Your Policies and Procedures?
June 15 is World Elder Abuse Awareness Day. Firms may want to consider policies and procedures that address suitability risks specific to senior investors and ensure that customer profile information is up to date. MSRB Rule G-19 requires firms to have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on information obtained through reasonable diligence into an individual’s investment profile, including, among other things, the customer’s age, investment time horizon and liquidity needs.
June 5, 2018: New CUSIP Requirements Effective June 14
Amended MSRB Rule G-34 becomes effective on June 14, 2018, and will require, among other things, that municipal advisors apply for a CUSIP number when advising on a competitive transaction in municipal securities. The application must be submitted no later than one business day after dissemination of a notice of sale or other such request for bids. Although the CUSIP number may not be assigned until the final award of the bond purchase agreement, the application requirement helps ensure that trading in the new issue can begin immediately upon award.
View the approval notice for amended MSRB Rule G-34.
May 29, 2018: Priority of Orders
Underwriters must honor their commitments to the issuer with respect to the priority of orders in connection with negotiated primary offerings of municipal securities. MSRB Rule G-11 and related guidance under MSRB Rule G-17 issued in 2010 and 2012, address this obligation, which applies equally to a sole underwriter, a syndicate manager or a syndicate member. It would be inconsistent with the principles of fair dealing for an underwriter, absent the issuer’s consent, to allocate securities in a manner that is inconsistent with the priority provisions that have been agreed to with the issuer, including requirements related to retail orders.
May 21, 2018: Does Your Firm Underwrite 529 Savings Plans or ABLE Programs?
Underwriters of 529 savings plans or ABLE programs, or their agents, must make certain submissions to the MSRB under Rule G-45. When an underwriter first becomes associated with a 529 savings plan or ABLE program, it is important to keep in mind certain obligations under MSRB rules. For example, an underwriter may first become associated when a 529 savings plan’s contract with its prior program manager and its dealer-affiliated entity expires. If this occurs, the underwriter may have to update its registration information on MSRB Form A-12. Further, an underwriter that is the primary distributor for a 529 savings plan or ABLE program must submit to the MSRB, under MSRB Rule G-32, disclosure documents for the relevant 529 savings plan or ABLE program it underwrites.
May 14, 2018: Join a Compliance Workshop for Small Municipal Advisors
Small municipal advisor firms, you don’t want to miss this compliance workshop! Join us on Thursday, May 24, 2018 from 3:00 – 4:00 p.m. ET where staff from the MSRB and the Securities and Exchange Commission will explore considerations for small municipal advisors. The workshop will cover tailoring supervisory procedures to the nature and scope of a firm’s municipal advisory activities, and methods of documenting supervisory controls consistent with regulatory obligations under MSRB Rule G-44. Register for the workshop.
May 7, 2018: Dealers – Help Your Customers Understand the New Mark-up Changes
You may want help educating your retail customers about the mark-up disclosure requirements effective May 14, 2018. What is Mark-up? describes mark-ups and mark-downs for investors and explains how to review mark-up information on a trade confirmation. Understanding Your Confirmation provides an overview of information investors can expect to find on their trade confirmation, including a direct link to more information about the municipal security on the MSRB’s Electronic Municipal Market Access (EMMA®) website. Access these resources today from the “Buying and Selling Bonds” section of the MSRB’s free online Education Center.
April 30, 2018: Have You Seen EMMA Lately?
In the past 10 years, the MSRB’s Electronic Municipal Market Access (EMMA®) website has become a go-to source for material information about virtually every municipal security and for aiding dealers to meet their time-of-trade disclosure obligations under MSRB Rule G-47. Today, EMMA gets a fresh new look, with noticeable improvements to the homepage navigation and a more intuitive presentation of information about individual securities. Explore the new and improved EMMA at emma.msrb.org.
April 23, 2018: Think Before You Click!
Become cyber aware of suspicious emails. Phishing emails with malicious attachments are designed to look like legitimate emails. Clicking a link or opening an attachment from a phishing email is one of the leading root causes of data breaches. Recognizing that a cyber attack may have consequences that extend beyond the compromised firm, the Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations noted that cybersecurity will continue to be a priority in each of its examination programs. Read the SEC’s 2018 Examination Priorities.
April 16, 2018: Municipal Advisor Annual Certification for Your Records Only
On an annual basis, the chief executive officer (or equivalent officer) of each municipal advisor firm must certify in writing that the municipal advisor has in place processes to establish, maintain, review, test and modify written compliance policies and written supervisory procedures designed to achieve compliance with applicable rules. The certification should be maintained in the firm’s records and made available for review upon examination, but does not need to be submitted to the MSRB. See MSRB Rule G-44(d).
April 9, 2018: Make the Best of Best Ex
The Financial Industry Regulatory Authority identified best execution in its 2018 Regulatory and Examination Priorities. Dealers may want to consider, in addition to the annual requirement, undertaking a review of their policies and procedures under MSRB Rule G-18 for determining the best available market for the executions of customers’ transactions. See the MSRB’s interpretive guidance on Rule G-18 for answers to frequently asked questions on best execution.
April 2, 2018: Don’t Be an April Fool, Know the Rule!
Download the latest MSRB Rule Book PDF, updated quarterly. You can always find the current text of all MSRB rules on our website at msrb.org.
March 26, 2018: Avoid Striking Out This Baseball Season
Baseball's opening day is almost here! Before heading to the stadium, consider reviewing your policies and procedures surrounding business entertainment. For example, taking a client to a baseball game is allowed under MSRB Rule G-20 on gifts, gratuities and non-cash compensation if such business entertainment is not so frequent or extensive that it raises questions of propriety. Read the MSRB’s FAQ on gift giving to learn more.
March 19, 2018: Happy First Day of Spring!
Welcome the end of winter with some spring cleaning. At least annually, each municipal advisor firm must conduct a review of its compliance policies and supervisory procedures to ensure they remain reasonably designed to achieve compliance with applicable rules. See MSRB Rule G-44(b).
March 12, 2018: Be Cyber-Confident
The Securities and Exchange Commission (SEC) notes that cybersecurity is a responsibility of every market participant and is making cybersecurity a priority of its National Exam Program. Explore the following resources to learn more:
March 5, 2018: Read Public Feedback on the MSRB’s Compliance Support Activities
We asked, you answered! The MSRB received 15 comment letters during our request for input on how we can most effectively facilitate compliance. Read the letters here. Missed the comment deadline? We welcome your feedback throughout the year. Email us at Compliance@msrb.org.
February 26, 2018: Join a Compliance Workshop for Municipal Advisors
Join the MSRB for the second in a series of virtual compliance workshops on Friday, March 9, 2018 at 12:30 p.m. – 1:30 p.m. ET. This workshop will explore MSRB Rule G-42 provisions related to documenting the municipal advisory relationship and making disclosures. Register for the workshop.
February 20, 2018: Systems Holiday Schedule
Happy President’s Day! Keep up with federal holidays that affect the operations of MSRB market transparency systems by viewing the Systems Holiday Schedule.
February 12, 2018: Subscribe to Compliance Corner
Make sure you are signed up to receive the MSRB’s quarterly newsletter on compliance topics, Compliance Corner. Sign up here.
February 5, 2018: Tells Us How We Can Help
Share your feedback on how the MSRB can more effectively facilitate understanding of our rules. Respond to the MSRB’s request for comment on our compliance priorities through February 9, 2018.
January 22, 2018: Municipal Advisors – Review SEC Form MA-I
The MSRB recommends firms review the accuracy of their Forms MA-I on file with the Securities and Exchange Commission (SEC) before January 31, 2018 because professional fees assessed by the MSRB pursuant to MSRB Rule A-11 are calculated based on the number of associated persons qualified as a municipal advisor representative and for whom the municipal advisor firm maintains an active Form MA-I with SEC as of January 31 each year. See MSRB Rule A-11, on assessments for municipal advisor professionals. Keep sending me the Compliance Tip of the Week.
January 16, 2018: Remember to Affirm or Update MSRB Form A-12
All MSRB-registered firms must review their information on MSRB Form A-12 and either affirm that the information remains accurate or update the information by January 25, 2018. Read more about the affirmation process. Keep sending me the Compliance Tip of the Week.
January 8, 2018: Understanding the Impact of Tax Reform on Your WSPs
Have you started to review what, if any, changes to your written supervisory procedures (WSPs) may be necessary in light of the Tax Cuts and Jobs Act provisions applicable to the municipal securities market? Keep sending me the Compliance Tip of the Week.
January 2, 2018: Resolve to Maintain a Culture of Compliance
Happy New Year from the Municipal Securities Rulemaking Board (MSRB). Resolve to maintain a culture of compliance at your firm in 2018. The MSRB can help with weekly compliance tips about important deadlines, resources and considerations for municipal market professionals. Send me the Compliance Tip of the Week.
This week’s tip: Access a library of compliance resources to support understanding of regulatory obligations in the MSRB’s online Compliance Center.