Securities Law

MSRB Names New Board Members

The Municipal Securities Rulemaking Board on Tuesday named new officers and board members who will assume their posts on Oct. 1, the start of the MSRB's new fiscal year.

Daniel Heimowitz, managing director at RBC Capital Markets, will serve as chair of the MSRB, replacing Jay Goldstone, former chief operating officer for San Diego. Joseph J. Geraci, managing director and co-head of municipal markets at Citi, will become vice chair, replacing Stephen Heaney, a managing director at Stifel, Nicolaus & Co. Both are bank officials and will serve one-year terms.

The 21-member MSRB, which the Dodd-Frank mandated to be a majority public board, has 11 members from the public and 10 from regulated firms. Joining the board as securities firm representatives are James D. McKinney, senior advisor at William Blair & Company, and Brian L. Wynne, co-head of public finance and head of the municipal syndicate desk at Morgan Stanley. Nathaniel Singer, managing director at Swap Financial Group, will serve as a municipal advisor representative. That satisfies the requirement that at least one regulated member be from a securities firm, one from a bank, and one from a municipal advisory firm.

New public representatives on the 21-member board include Robert P. Cochran, co-managing director and chairman of the board at Build America Mutual Assurance Company; Lakshmi Kommi, director of debt management for San Diego, Calif.; Christopher M. Ryon, managing director at Thornburg Investment Management; and Colleen Woodell, former chief credit officer of global corporate and government ratings for Standard & Poor's.

Of the public members, at least one must represent institutional or retail investors in municipal securities, at least one must be representative of municipal entities and at least one must be a member of the public with knowledge of or experience in the municipal industry.

But some market participants have questioned whether the board's composition is in keeping with the spirit of the Dodd-Frank reforms, as some public members have been affiliated with dealer firms, represented them as attorneys, or are retired.

Current board member Marcy Edwards was a senior policy advisor at the office of the chief financial officer of the District of Columbia, but retired last year. Another current board member, former Pennsylvania treasurer Robin Wiessmann, was an executive banker at Goldman Sachs and Merrill Lynch years ago. Cochran's firm is a member of Bond Dealers of America. Robert Fippinger, senior counsel at Orrick, Herrington & Sutcliffe, has very close ties with Goldman, Sachs.

One market participant who asked not to be named expressed outrage, accusing the MSRB of making a "mockery" of the idea of a public board. Public representatives with close ties to dealer firms will never challenge the dealer agenda, the critic asserted, adding that the SEC is not playing enough of a role in the nomination process. An MSRB committee currently controls the nomination process under MSRB Rule A-3.

"The SEC needs to take firmer control of the nomination process," the market participant said.

The SEC used to vet MSRB recommendations for the board, but no longer has that authority under Dodd-Frank.

The new board members emerged from a list of more than 180 applicants, which the MSRB published, that includes a number of state and local governmental officials.

In addition to Goldstone and Heaney, five other board members will depart. These include public members Milroy Alexander, Sheryl Bailey and David Madigan, as well as securities firm representative Alan Polsky and municipal advisor representative Bob Lamb.

Bond Dealers of America president and chief executive officer Mike Nicholas congratulated the two new BDA members on the board. "The BDA congratulates both Jim McKinney and Bob Cochran as new MSRB board members for FY 2014," Nicholas said. "Jim is a current BDA board member and will bring a wealth of experience, knowledge and leadership to the MSRB. Bob is at BDA member firm Build America Mutual and also has years and years of tangible muni market knowledge and experience and will also be a great addition to the board. The BDA is very happy to see the continued direct connection to the MSRB board and we look forward to working with both Jim and Bob in their new roles."




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