WASHINGTON — The Securities and Exchange Commission has stalled the Municipal Securities Rulemaking Board’s proposed Rule G-17 guidance on fair dealing for underwriters, seeking more public comments on the proposal, according to the MSRB.
Under federal law, the SEC had to approve or disapprove the MSRB’s proposed G-17 amendments by Dec. 8, which was 90 days after the proposal’s publication in the Federal Register, the board said in a press release.
The commission issued an order instituting a proceeding to determine whether to disapprove the proposal, saying it had reached no conclusions about the proposed rule change, and calling for another round of comments, the MSRB said.
The delay comes after dealer and industry groups criticized the proposal, which would for the first time require broker-dealers to tell issuers that, unlike municipal advisors, they are not fiduciaries and would prohibit underwriters from telling issuers not to hire FAs. A fiduciary generally must put a client’s interests ahead of its own.
Issuers have applauded the board’s move, saying the proposed G-17 amendments would help protect state and local governments from fraudulent and manipulative acts and practices.
“It’s a significant and major issuer protection initiative and it’s incredibly important,” Lynnette Hotchkiss, the MSRB’s executive director, said in an interview. “But it’s better to take the time to get it right.”
