The MSRB has announced that the SEC is seeking additional time to consider its proposal regarding the duties of underwriters to state and local government issuers under the MSRB’s “fair dealing” rule. The proposal would for the first time establish detailed obligations of underwriters of municipal securities to their state and local government clients regarding clear disclosure of risks and conflicts of interest, among other things.
The proposal is a key piece of the MSRB’s rulemaking initiatives to protect issuers in the municipal market, which is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Our analysis on the original proposal and related amendments can be found here.
The proposal was published in the Federal Register on September 9, 2011, and an amendment to the proposal was published on November 21, 2011. Under federal law, the SEC had 90 days from September 9 to approve or disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change. The 90-day period ended December 8, 2011.
On December 9, 2011, the SEC published a notice and order to institute proceedings pursuant to Section 19(b)(2)(B) of the Securities Exchange Act to determine whether to approve or disapprove the MSRB’s proposed rule change. In its notice, the SEC said that the institution of the proceedings does not indicate it has reached any conclusions with respect to the proposed rule change, or that it will ultimately disapprove the proposed rule change. The SEC is however seeking additional input from interested parties on the issues presented by the proposed MSRB rule change.
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