Law and regulation

For the first time in the municipal securities market, the Securities and Exchange Commission on Tuesday charged a municipal advisory firm, its chief executive officer, and two of its employees for breaching their fiduciary duty by failing to disclose a conflict of interest to a municipal client.

The Securities and Exchange Commission’s Division of Investment Management has issued a guidance document urging funds with exposure to Puerto Rico debt to continually update their disclosures based on the risks associated with their investments.

Issuers are not likely to change the Securities and Exchange Commission staff’s minds about the violations they have disclosed under the commission’s municipal self-reporting initiative, the commission’s top cop for municipal securities enforcement said on Thursday.

Most issuers that obtained bank loans in 2015 did not hurt their credit quality, but some had bank loans with terms that adversely impacted credit quality. Increased disclosure of bank loans obtained, as well as their terms, is needed, according to a Standard & Poor’s report released on Wednesday.

The Senate Banking Committee has scheduled a hearing on March 15 to consider Lisa Fairfax and Hester Peirce, President Obama’s two nominees to the Securities and Exchange Commission.

The Securities Industry and Financial Markets Association wants municipal securities transactions to be closed out within 15 days of settlement, rather than the 30 days proposed by the Municipal Securities Rulemaking Board.

The Securities and Exchange Commission on Monday charged a Rhode Island agency, its underwriter, and three individuals associated with $75 million of 2010 bonds for a startup video game company with defrauding investors by not revealing the complete financial status of the company or the extent of the compensation arrangement with the underwriter.

Municipal bond trading volume fell 13% during 2015 while the overall number of trades remained relatively stable, continuing a pattern that stretches back to 2007, according to data released Thursday by the Municipal Securities Rulemaking Board.

John Fechter, managing director and head of taxable trading at Wells Fargo Advisors in St. Louis, Mo., has been chosen to chair Bond Dealers of America this year by the group's members.

The Municipal Securities Rulemaking Board announced Wednesday it is pushing back the effective date for several amendments to its trade reporting rule to July 18 from May 23 to align them with the date for similar Financial Industry Regulatory Authority requirements.

The Municipal Securities Rulemaking Board filed proposed amendments to two rules with the Securities and Exchange Commission late Tuesday in an effort to move the municipal securities market to a two- instead three-day settlement cycle.

Reps. Randy Hultgren, R-Ill., and Dutch Ruppersberger, D-Md., have launched a Municipal Finance Caucus made up of House members from both political parties who will fight to protect the tax-exempt status of municipal debt and ensure there is a robust market for municipal securities.

Understanding your culture is a priority for the Financial Institution Regulatory Authority. While some doubt FINRA can do this, there are steps your firm can take to demonstrate adherence to rules and regulations that have an impact on the objective "indicators" of FINRA's cultural assessment.

Lisa Washburn, the new chair of the National Federation of Municipal Analysts, wants NFMA this year to become more proactive in collaborative industry efforts to improve municipal bond disclosure and address changes in the municipal market.

Several industry groups are telling the Securities and Exchange Commission they support Municipal Securities Rulemaking Board changes that would shift the board members’ term limits to four years from three.

Overzealous regulators are a big problem for middle-market broker-dealers said Warren Stephens, chief executive officer of Stephens, Inc. and a founding member of the Bond Dealers of America.

Six broker-dealers and investment providers have agreed to pay $103.35 million in preliminary settlements of charges by issuers and state attorneys general that they engaged in bid-rigging and price fixing for municipal investment products and derivatives.

The Bond Dealers of America is now part of a new umbrella organization called the American Securities Association that will also include an upstart association for middle market equities dealers.

The Financial Industry Regulatory Authority ordered George K. Baum & Co. to pay $270,000 for charging a Colorado school district more than four times the firm’s normal underwriting fee, partly to pay for costs associated with promoting bond ballot initiatives.

The National Association of Bond Lawyers is urging the Treasury Department and Internal Revenue Service to create special, more lenient issue price rules for competitive transactions, particularly small deals.