Contact: Jennifer A. Galloway, Chief Communications Officer
(703) 797-6600
jgalloway@msrb.org
MUNICIPAL SECURITIES RULEMAKING BOARD REMINDS DEALERS OF
SALES PRACTICE AND DUE DILIGENCE OBLIGATIONS
Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB), in coordination with the Financial Industry Regulatory Authority, today reminded firms that sell and trade municipal securities of their obligations to customers. MSRB rules, available on www.msrb.org, include standards of professionalism and fair practice, and the obligation of municipal securities dealers to fully understand bonds they sell as part of their disclosure, suitability and pricing obligations. In every municipal security transaction, dealers must obtain, analyze and disclose all material facts known to the dealer, or that are reasonably accessible to the market through established industry sources.
“Today’s notice serves as a reminder to dealers that the MSRB’s most fundamental rules governing the sale and trading of municipal securities apply to every transaction, whether in a primary offering or the secondary market,” said Lynnette Kelly Hotchkiss, Executive Director of the MSRB. “Selling securities is not like selling other types of products,” she said. “Dealers must ensure that a recommended security is suitable, that all material information about it is known and that the security is fairly priced.”
Of particular importance, Hotchkiss said, is the duty of dealers to assess the material facts about a security that are generally available in official statements, continuing disclosures and other information made available through the MSRB’s Electronic Municipal Market Access (EMMA). However dealers have a duty to obtain and disclose information that is not available through EMMA, if it is material and available through other established sources.
Today’s notice also reminds dealers that the Securities and Exchange Commission recently approved amendments to Securities Exchange Act Rule 15c2-12, governing continuing disclosures that will be effective in December 2010. These changes will increase the continuing disclosure requirements for certain municipal securities and establish timeliness standards for submission to EMMA of material event notices by municipal bond issuers, among other changes.
