Recently, the MSRB filed numerous proposed rules for municipal advisors regarding pay to play, fiduciary duty, fair dealing, supervision, gifts and assessment. See Bingham Alert, MSRB Forges Ahead With Municipal Advisor Proposal Filings With the SEC, September 6, 2011, bingham.com.
On Friday, September 9, the MSRB withdrew these filings and in a notice today stated that “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.”1
The MSRB’s Notice also stated that the MSRB is “…concerned that because the [Municipal Advisor] definition has not been finalized, some firms and individuals will not participate in the SEC comment process on the MSRB proposals.” Moreover, in its Notice, the MSRB informed firms that its rulemaking process for municipal advisors will continue and that “…[o]nce 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 had requested in its original rule filings with the SEC that its various proposed rules and rule changes be made effective on the date that SEC rules defining the term “municipal advisor” under the Exchange Act first become effective or on such later date as the proposed rule change is approved. Today’s announcement fundamentally changes the MSRB’s timing. The MSRB’s rule proposals will be re-filed with the SEC after the SEC’s rules are final. Firms will then know if they will be impacted by the MSRB’s proposals and those impacted will be strongly urged to comment on the MSRB’s proposals at that time.
For additional information concerning this alert, please contact the following lawyers:
1 See MSRB Notice 2011-15, dated September 12, 2011 (the “Notice”). Specifically, the Notice provides that on September 9, 2011, the Municipal Securities Rulemaking Board (MSRB) withdrew the following municipal advisor rule proposals, which were pending with the Securities and Exchange Commission (the “SEC”):
In the Notice, the MSRB stated that SR-MSRB-2011-13 (August 22, 2011) (Proposed Rule Change Consisting of Proposed New Rule G-44, on Supervision of Municipal Advisory Activities, along with Related Proposed Amendments to Rule G-8, on Books and Records, and Rule G-9, on Preservation of Records) was already undergoing revision and will not be re-filed at this time.