Law and regulation

Dougherty & Co. and its former employee Jeffrey Hill have agreed to $140,000 and $5,000 fines, respectively, to separately settle with the Financial Industry Regulatory Authority over charges that Hill recommended and initiated numerous unsuitable trades for two elderly customers.

Legislation designed to enhance the Securities and Exchange Commission’s cost-benefit analysis of new rules before approving them passed the House after drawing support from Republicans and some industry groups.

Public pension and municipal advisors are among the examination priorities for the Securities and Exchange Commission in 2017, the SEC’s Office of Compliance Inspections and Examinations announced Thursday.

Municipal market participants see a slowing of Treasury Department and Internal Revenue Service guidance and rules in 2017, but plan to closely watch for tweaks to management contract guidance, final requirements for public approval of private activity bonds and political subdivision rules.

The Municipal Securities Rulemaking Board has agreed to clarify certain definitions and extend the effective date for proposed rule changes on complaints in response to market participants' concerns, but will not move forward with changes to address several other issues participants raised.

The Port Authority of New York and New Jersey has agreed to admit wrongdoing and pay a $400,000 penalty to settle Securities and Exchange Commission charges that it failed to disclose risks associated with New Jersey road projects to the investors that bought the bonds to finance them.

The Municipal Securities Rulemaking Board’s net assets in fiscal 2016, similar to those for the previous year, are still close to triple where they were in 2010, even after a $5.5 million rebate the self-regulator gave dealers this past year.

The Campaign Legal Center is trying to convince a federal court overseeing a challenge brought by Republican groups that the Municipal Securities Rulemaking Board’s rule changes to prevent municipal advisors from engaging in pay-to-play practices are legal and needed to address the potential for corruption in the municipal market.

The Financial Industry Regulatory Authority's enforcement priorities for 2017 will include ensuring municipal advisors are properly registered with regulators, checking broker-dealers' compliance with best execution requirements, and monitoring firms' efforts to avoid unsuitable recommendations of securities.

President-elect Donald Trump’s pick of New York lawyer Jay Clayton to lead the Securities and Exchange Commission represents a balanced choice for the agency in line with Trump’s focus on deregulation but municipal participants will likely have to wait to find out what impact he may have on the muni market, individuals and groups said.

Securities and Exchange Commission enforcement officials are expected to focus on disclosure and pricing abuses as well as increase their oversight of municipal advisors during the coming year, according to regulators and market participants.

In the regulatory and legislative arenas next year, dealers will have to grapple with how to set up compliance programs for markup disclosure rules while municipal advisors try to adjust to the many rules adopted in 2016 and issuers work to improve disclosure to stave off legislation.

Ross Sinclaire & Associates has agreed to pay $250,000 and to disgorge ill-gotten gains to settle muni rules violations with the Financial Industry Regulatory Authority after it improperly acted as a financial advisor and underwriter on the same muni issuances. The Cincinnati-based firm also failed to disclose material facts in offering documents and was late in filing underwriting disclosures with regulators, FINRA said.

We take a deeper look at material information that is reasonably accessible that should be disclosed at or before the time of trade.

The Municipal Securities Rulemaking Board’s rule changes to prevent municipal advisors from engaging in pay-to-play practices are constitutional and comply with federal statutes, contrary to the claims of three Republican groups, the MSRB told a federal appeals court on Monday

Revere Securities was fined $10,000 for trade reporting failures while two individuals were fined a total of $22,500 and suspended for improper trading of municipal securities and supervisory failures by the Financial Industry Regulatory Authority.

Brad Bennett, who oversaw many important municipal bond enforcement cases over nearly six years, plans to leave the Financial Industry Regulatory Authority as its enforcement chief early next year and return to private practice.

Market groups and firms are asking the Municipal Securities Rulemaking Board to rethink proposed rule changes related to complaints, saying they should be adapted to better fit the differences in the relationships that municipal advisors have with clients and dealers have customers.

The Securities and Exchange Commission will not bring any more settlements under its Municipalities Continuing Disclosure Cooperation initiative and will instead focus on those underwriters and issuers that did not voluntarily disclose violations under the MCDC.

Issuer officials who said Treasury's final issue price rules are a vast improvement over earlier proposals nevertheless raised concern that they might discourage competitive sales of bonds or create problems for issuers if underwriters run afoul of the rules.