The Municipal Securities Rulemaking Board has filed a proposal with the Securities and Exchange Commission that would prohibit, with a few exceptions, broker-dealers from providing consent to issuer requests to change bond authorizing documents.
The MSRB says the change, an amendment to its Rule G-11 on primary offering practices, would help protect bond owners by not allowing underwriters or remarketing agents to agree to changes that could adversely affect them. Issuers often seek changes to authorizing documents to eliminate outdated provisions or correct operational concerns. These alterations typically are approved with the consent of a certain percentage of bondholders. Since identifying and obtaining consent from bond owners can be difficult, issuers frequently have requested underwriters, as temporary owners of bonds during the initial distribution period, to consent to the changes.