WASHINGTON — A new year will mean new advertising rules and testing requirements for municipal advisors.
On Feb. 7, the Municipal Securities Rulemaking Board, Financial Industry Regulatory Authority and the Securities Exchange Commission will address advertising, defining duties for non-solicitor muni advisors and test prepping at its
The SEC’s Office of Compliance Inspections and Examinations and Office of Municipal Securities are partnering with the MSRB and FINRA to sponsor the program.
“This event, as with past events, is an important opportunity for municipal advisors and regulators to discuss rulemaking and learn from each other, which helps facilitate compliance with the rules and helps the regulators understand how the rules are implemented on the ground,” said Susan Gaffney, Executive Director at the National Association of Municipal Advisors
The first panel will focus on MSRB Rule G-42 relating to conduct for non-solicitor and solicitor muni advisors.
The second panel will delve into upcoming MSRB rules such as G-40, which goes into effect on Feb. 7. It establishes content standards for muni advisor advertising and places formal restrictions on non-dealer MA advertising for the first time. The rule says MA advertisement cannot be misleading nor have customer testimonials.
In the past, muni advisors and broker dealers told the board it needed to improve the quality of mock advertisements in its municipal advertising rule guidance.
“We’ve been getting lots of questions about G-40 and so the need for clear guidance and understanding the rule is really important,” Gaffney said.
Muni advisors are gearing up for the rule by reviewing their websites, social media and in-house content to figure out what is covered by G-40, Gaffney said.
A panel will also address it new G-3 rule, which went into effect on Dec. 20 this year. It requires 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 February 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.
In the afternoon, SEC and FINRA exam staff will discuss the exam and how to prepare for it. A panel will also discuss underwriter roles and municipal advisors’ roles in public offerings of municipal securities and the investment of bond proceeds.
“This program, now in its fourth year, highlights our continued commitment to promote compliance with municipal advisor regulations by providing the industry the opportunity to engage first-hand with all three regulators regarding regulatory obligations,” said Rebecca Olsen, Director of the SEC’s Office of Municipal Securities.
All municipal advisor and securities industry professionals can register through FINRA. The program will also be available live via webcast on the SEC’s website.
