Rule G-23, Activities of Financial Advisors

MSRB Rule G-23 establishes certain basic requirements applicable to a dealer acting as a financial advisor with respect to the issuance of municipal securities. Rule G-23 provides that for purposes of the rule, generally a financial advisory relationship shall be deemed to exist when a dealer renders or enters into an agreement to render financial advisory or consultant services to or on behalf of an issuer with respect to the issuance of municipal securities. The rule also requires each financial advisory relationship to be evidenced by a writing that meets certain minimum requirements specified in the rule. Additionally, unless an exception applies, Rule G-23 prohibits a dealer that has a financial advisory relationship with respect to the issuance of municipal securities from serving as underwriter or placement agent on the same issuance.

Rule G-23 predates the implementation of the statutory framework for federal regulation of municipal advisors and the related suite of municipal advisor rulemakings by the SEC and the MSRB. Now that the general framework for municipal advisor regulation is largely established, the MSRB believes it is appropriate to conduct a retrospective review of Rule G-23 to ensure that, among other things, the restrictions and requirements imposed upon dealers acting in a financial advisor capacity remain appropriate in light of the municipal advisor regulatory regime and that they are clearly delineated. 

Read Rule G-23 and its interpretive guidance.