WASHINGTON — Due to a nearly month-long federal government shutdown, a compliance outreach program for municipal advisors hosted by regulators has been postponed.
The Securities and Exchange Commission, the Municipal Securities Rulemaking Board and the Financial Industry Regulatory Authority had planned to hold the compliance program Feb. 7 in San Francisco but will reschedule it, according to a release. The program was expected to be heavily-attended and would address advertising rules, duties of non-solicitor muni advisors and test prep for the Series 54 Exam — a required test for municipal advisor principals.
Since the SEC and MSRB worked together on the new rules, Ritta McLaughlin, MSRB chief education officer said it was important to have the SEC participate. The SEC’s Office of Compliance Inspections and Examinations partnered with the MSRB and FINRA for the program and because of the shutdown, many at the SEC are not working.
“We wanted to make sure that we were providing a comprehensive approach to being able to get those questions addressed that market participants may have,” McLaughlin said. “We’ve been working on this together and we thought it was important for all parties to participate.”
As for a new date, McLaughlin said the groups will discuss when that will be once the government reopens and said the agenda is not likely to change.
Municipal advisors and other professionals, especially in California, were very interested in attending the program and hearing from the groups on compliance matters, said Susan Gaffney, executive director of the National Association of Municipal Advisors.
“Once the government and the SEC offices are up and running again, I am sure that they will continue to find an attentive audience on the West Coast for the topics that were on the agenda,” Gaffney said.
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An agenda released in December revealed the program would have panels focused on MSRB Rule G-42 —the core conduct rule for muni advisors — and upcoming rules such as G-40, which goes into effect on Feb. 7. The new rule establishes content standards for muni advisor advertising and places formal restrictions on non-dealer MA advertising for the first time.
In December, Gaffney said her group received many questions relating to G-40 and said the need for clear guidance and understanding of the new rule is important. Muni advisors have prepared by reviewing their websites, social media and in-house content to see what is covered, Gaffney added.
The program would also address amendments to Rule G-3 which went into effect on Dec. 20, 2018. Those changes require muni advisor principals to take a new Series 54 test on top of the existing Series 50 test that all muni advisors have to pass.
The MSRB will have a pilot Series 54 exam from March 2019 through June 2019 for all muni advisor principals. During that time, the board will establish a passing score for the test. MA principals that pass the test will be considered qualified as a principal when the MSRB permanently establishes the Series 54 in the fall of 2019. Qualification is important because the MSRB’s supervision rule requires that at least one person at a firm be designated a principal and be responsible for supervising the firm’s other professionals.
The compliance outreach program was expected to be one of the most heavily MSRB-attended events out of eight other events in the first quarter of the year.
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The MSRB is focused on stakeholder outreach, regulatory compliance support, and a retrospective review of its existing rules following the fast and furious rulemaking that took place following the release of the Securities and Exchange Commission’s final Municipal Advisor Registration Rule in 2013. The MSRB had to build a new regulatory regime for muni advisors as required by passage of the Dodd-Frank Act, and is still finalizing that regime as it prepares to begin offering qualification exams for muni advisor principals this year.
