U.S. Sen. John Kennedy, R-La., whose criticism of the Municipal Securities Rulemaking Board as "an insider's club" goes back years, has introduced a bill that would require stricter Securities and Exchange Commission oversight of the MSRB and also calls for "regulated representatives" to constitute a majority of the MSRB's board.
The regulated representative majority called for under Kennedy's Municipal Securities Rulemaking Board Reform Act of 2026 differs from the board's current composition, which aligns with the public representative majority structure described in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
Currently, the 15-member board consists of eight public representatives and seven regulated representatives.
The senator's bill "would codify several internal changes taken by the MSRB and require a stricter oversight role for the SEC," according to a March 2 press release issued by his office. Kennedy introduced the bill in the U.S. Senate on Feb. 26.
The MSRB, which oversees a municipal securities market "worth trillions of dollars in public projects," is "supposed to represent the consumer," Kennedy said in the release.
"Instead, it's an insider's club. It's more incestuous than King Tut's family," he said. "Public seats on the board shouldn't be filled by executives who just quit their Wall Street jobs. These reforms are long overdue."
The MSRB, with little oversight from the SEC and Congress, "currently sets and approves its own budget, including the size of its members' paychecks," the release from Kennedy's office said.
"This lack of oversight has led to brazen abuses from members of the Board, with its President and Chief Executive Officer
In addition to stipulating that a majority of board members be regulated representatives, Kennedy's bill would require that public representatives be individuals who haven't been associated with "a municipal securities broker, a municipal securities dealer, a broker, a dealer, or a municipal advisor" during the five-year period preceding the date on which they are appointed to the board.
With regard to regulated representatives, the bill calls for no fewer than two of them to be what it called "broker-dealer representatives." It characterized such members as those who are not associated with banks or units of banks. The bill also called for the board's regulated representatives to include at least one bank representative and at least two members associated with a municipal advisor.
The American Securities Association supports the bill.
"ASA applauds Sen. Kennedy's MSRB Reform Act because it brings much-needed transparency and accountability to the MSRB's governance process," ASA President and CEO Chris Iacovella said in a release. "Reforming the MSRB's board will benefit investors by freeing our public finance markets from conflicted individuals pushing political anti-market agendas."
The MSRB on Tuesday declined to comment regarding the bill.
Kennedy also characterized the MSRB as "an insider's club" that is "more incestuous than King Tut's family" in a 2019 press release issued by his office regarding a bill he introduced that year called the "Municipal Securities Rulemaking Board Reform Act of 2019."
Unlike the current bill, however, the
