Government shutdown thwarts MSRB extension

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WASHINGTON – The partial federal government shutdown has prevented the Municipal Securities Rulemaking Board from filing for an extension to the effective date for new muni advisor advertising rules, though the board plans to file for a delay as soon as the government reopens.

The MSRB announced Jan. 24 it still plans to seek a delay of the current Feb. 7 effective date for previously approved amendments to its Rule G-21 on advertising by brokers, dealers or municipal securities dealers and new Rule G-40 on advertising by municipal advisors. The MSRB had said late last year it would do so, but the ongoing partial government shutdown has prevented the board from asking the Securities and Exchange Commission for a new effective date “of not more than six months from the date that the MSRB publishes a notice announcing the new effective date.”

The MSRB intends to file that request with the SEC as soon as the government reopens.

Rule G-40 is a milestone because it will formally regulate muni advisor advertising for the first time, requiring among other things that advertisements not be misleading and prohibiting muni advisors from using client testimonials in an advertisement.

“We thought it was important to reiterate for dealers and municipal advisors the MSRB’s intention with respect the effective date of our advertising rules,” said MSRB President and CEO Lynnette Kelly. “Clearly, the partial government shutdown has prevented us from processing the filings with the SEC that are necessary to make the change. However we are committed to extending the effective date and if the SEC does not open by Feb. 7, we plan to seek retroactive action for the change.”

The MSRB intends to announce a new effective date after the board completes guidance and related rule amendments on the use of social media under the advertising rules, the MSRB said in a release. The SEC is not obligated to approve the MSRB’s filing, but historically has rarely opposed the MSRB’s proposed effective dates.

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Securities law MSRB rules SEC regulations Municipal advisors MSRB SEC