WASHINGTON — The Municipal Securities Rulemaking Board plans in June to file with the Securities and Exchange Commission its proposed Rule G-36 on the fiduciary duty of municipal advisers, amendments to Rule G-20 on gift and gratuity limits for municipal advisers, as well as separate interpretative G-17 guidance on fair dealing for muni advisers and underwriters.
MSRB chairman Michael Bartolotta announced the forthcoming actions in a telephone briefing with reporters about the results of the board’s meeting here late last week.
Peg Henry, the board’s deputy general counsel, said the board has slightly revised the amendments to its Rule G-20 on gifts and gratuities to change the word “payments” to “gifts” to make it clear the MSRB had no intent to curb muni adviser salaries or rents. The rule changes also will make clear that the board intends for the rule to essentially have the same application to muni advisers as underwriters.
“We tried to make it workable to both parties,” Bartolotta said.
The board also met with Securities and Exchange Commission Elisse Walter, who is spearheading an SEC review of the muni market, Bartolotta said. The MSRB “offered to be a resource to the commission,” board officials said.
Walter is very interested in the muni market trade and pricing study that the MSRB has underway, they said. Erik Sirri, former director of the SEC’s trading and markets division, is overseeing that study.
Lynnette Hotchkiss, the board’s executive director, declined to specify when that study might be finished but said Sirri has been given “a very broad mandate to look at market and trading patterns.”
The board also met with Richard Ketchum, the chairman and CEO of the Financial Industry Regulatory Authority.
Bartolotta said the board and FINRA are working on an agreement about how they can work together and how the MSRB’s rules will be enforced, particularly given the new regulatory mandates of the Dodd Frank Wall Street Reform and Consumer Protection Act.
Bartolotta said they discussed, “How do we make sure that our rules are enforced fairly and vigorously.”
Hotchkiss said the agreement is “nothing new,” that the board has had such agreements in place with many other regulators, including FINRA. The MSRB provides muni market trade, disclosure and other data feeds to the regulators that go beyond what the public sees on the board’s site, she noted.
Bartolotta said the board is continuing to discuss changes to its Rule G-23, which would bar dealers from serving as financial advisers and underwriters in the same transactions.
Henry said the board will take up its proposed Rule G-43 on broker’s brokers at its July meeting in Denver.
