The Municipal Securities Rulemaking Board, or MSRB, has provided information to the SEC which it believes will assist the agency as it finalizes its definition of municipal advisors under the Dodd-Frank Wall Street Reform and Consumer Protection Act and addresses the activities of these financial professionals that provide advice and services to state and local governments.
The information, which includes a list of traditional municipal advisory activities, follows a meeting the MSRB Board of Directors held with SEC Chairman Mary Schapiro where they discussed, among other things, the issue of unregistered municipal advisors who are providing municipal advisory activities on behalf of state and local governments.
The letter expresses the MSRB’s belief that there are professionals engaging in traditional municipal advisory activities not registered with the SEC or MSRB as required under federal securities law. The MSRB maintains registration helps ensure these municipal market professionals adhere to appropriate standards of conduct, which include meeting minimum standards of professional qualifications and a fiduciary duty to state and local government issuer clients. The MSRB’s letter states that, “In such instances, we transmit referrals of specific firms for which we have no record of registration to the Commission for further investigation and possible enforcement action.”
The list of municipal advisory activities provided to the SEC by the MSRB includes transaction-related and strategic services. “[T]his list is intended to provide a fuller understanding of the range of municipal advisory activities for which there can be little dispute as to whether those activities were intended to be covered by Section 975 of the Dodd-Frank Act,” the MSRB’s letter states.
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