MSRB Seeks to Amend Regulatory Guidance on Fair Dealing to Improve Issuer Protections and Streamline Disclosures by Underwriters

Date: July 23, 2019

Contact: Jennifer A. Galloway, Chief Communications Officer


Washington, DC –The Municipal Securities Rulemaking Board (MSRB) today filed with the U.S. Securities and Exchange Commission (SEC) proposed amendments to its 2012 interpretive guidance under MSRB Rule G-17, on conduct of municipal securities and municipal advisory activities. These proposed amendments were informed by two public requests for comment and careful consideration of the objectives and practical aspects of underwriter disclosure requirements in the municipal securities market, and were developed as part of the MSRB’s ongoing retrospective review of its rules and interpretations.

The MSRB issued the 2012 interpretive guidance to address the Dodd-Frank Wall Street Reform and Consumer Protection Act’s mandate to protect municipal entities engaging the services of underwriters and municipal advisors. In the years since, and through recent formal comment processes, the MSRB received feedback from underwriters and issuers alike that the disclosures could focus more narrowly on the risks and conflicts most relevant to a given transaction.

“These proposed amendments reflect the MSRB’s commitment to listen to stakeholders, ensure state and local governments have access to fair and complete information, and, whenever possible, eliminate counterproductive or redundant regulatory requirements,” said MSRB President and Chief Executive Officer Lynnette Kelly.

Under the proposed amendments, only the sole underwriter or syndicate manager in a municipal securities underwriting is required to make certain general disclosures to the issuer regarding the arm’s-length commercial nature of the underwriting relationship. The proposed amendments also require the sole underwriter or syndicate manager to deliver a new disclosure that highlights the fiduciary obligation of a municipal advisor, an important distinction between an underwriter and municipal advisor. Additionally, the amendments allow an alternative method for underwriters to seek acknowledgment from an issuer to confirm that the issuer has received a disclosure.

“Streamlining information that underwriters provide in these disclosures is a win-win,” Kelly said. “Underwriters will not have the burden of drafting and delivering long boilerplate disclosures, and issuers will save time and resources by not having to sift through pages of legalese to identify the most significant conflicts and risks.”

The MSRB has requested flexibility in establishing the effective date of the revised interpretive notice, which the MSRB will announce within 90 days following approval by the SEC. View the filing.

The MSRB began a formal retrospective rule review in 2012 to help ensure MSRB rules and interpretive guidance are effective in their principal goal of protecting investors, issuers and the public interest. The retrospective review also seeks to ensure that MSRB rules are not overly burdensome, are clear and harmonized with the rules of other regulators, as appropriate, and are reflective of current market practices. Read more about the MSRB’s retrospective rule review.  

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.