The Municipal Securities Rulemaking Board, or MSRB, announced that it is delaying its municipal advisor rule proposals currently before the SEC.
According to the MSRB, the MSRB has been seeking to provide clarity to the municipal advisors registered under the SEC’s temporary registration rule by advancing a core set of rules. However, given substantial concern regarding the timing of a permanent municipal advisor definition, the MSRB is delaying its proposed rules on fiduciary duty, pay to play, fair dealing, supervision, gifts and assessments until the SEC adopts a permanent definition under the Securities Exchange Act of 1934.
The MSRB has a statutory mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to protect municipal entities and regulate municipal advisors. The MSRB stated it has sought to fulfill its Congressional mandate by soliciting broad input, issuing draft rules, seeking public comment and proposing core municipal advisor rules. Before the MSRB proposed its rules, it believes it took into account the potential breadth of the definition of municipal advisor under the SEC proposal. However, the MSRB is concerned that because the definition has not been finalized, some firms and individuals will not participate in the SEC comment process on the MSRB proposals.
The MSRB’s rulemaking process for municipal advisors will continue. Once municipal professionals have certainty from the SEC regarding who is covered by the MSRB rules, the MSRB’s rule proposals will be resubmitted to the SEC for approval.
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