WASHINGTON - The Municipal Securities Rulemaking Board warned financial advisers to state and local governments Wednesday that engaging in certain bank loans and financings may qualify as private placement activities, subjecting them to federal securities laws and MSRB rules that apply to broker-dealers.
In a one page statement, posted on the MSRB’s web site, the board said financial advisers who introduce potential investors to issuers or negotiate with potential investors in exchange for “transaction-based compensation” may unknowingly become subject to federal securities laws and MSRB rules governing placement agents.
“Private placements of municipal securities are on the rise and it is critical that financial advisors determine whether their activities require registration with the Securities and Exchange Commission as a broker to avoid inadvertent violations of relevant securities laws,” MSRB executive director Lynnette Hotchkiss said in a statement.
