WASHINGTON — The Municipal Securities Rulemaking Board issued a concept release Thursday seeking public feedback on whether to require underwriters and municipal advisors to disclose third-party payments.
Comments should be submitted to the MSRB no later than July 31.
The MSRB concept release proposes requiring underwriters and municipal advisors to disclose financial incentives they receive that could influence their recommendations, as well as payments they make that would influence third parties to steer business toward them The MSRB seeks comments about the benefits and burdens of the proposal, as well as suggested alternatives.
The concept release comes in the wake of a series of instances in which third-party payments “presented significant challenges to the integrity of the municipal market,” according to the release. The MSRB said undisclosed third-party payments may have contributed to the bankruptcy of Jefferson County, Ala.
“The MSRB would appreciate feedback from market participants about whether and how we should take steps to address potential conflicts of interest stemming from undisclosed financial relationships among dealers, advisors and third parties,” said MSRB executive director Lynnette Kelly in a media release. “This comes at a time when the MSRB is focused on our expanded mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to protect state and local government issuers.”