Law and regulation

The Municipal Securities Rulemaking Board has issued a concept release on whether it should require municipal advisors to disclose information about the bank loans or privately placed municipal securities of their issuer clients

House members are considering legislation for Puerto Rico that would mandate the creation of a federal oversight board and make it responsible for restructuring the territory’s debt and determining the priority of debt obligations and pension payments, several sources said on Wednesday.

The best execution rule, which took effect this week, may solidify a market shift concentrating retail customers in a few large firms, while others seek just to keep their institutional business running smoothly, market participants said.

Several of the Supreme Court Justices seemed sympathetic with Puerto Rico’s complaints that a federal appeals court ruling striking down its debt recovery law for its utilities leaves it “in a no man’s land” where it “is not entitled to the benefits,” but “ is subject to the burdens” of Chapter 9.

The Securities and Exchange Commission on Friday approved a Municipal Securities Rulemaking Board proposal that extends MSRB board term lengths to four years from three.

Republican lawmakers from both the Senate and House introduced legislation on Thursday that would make the courts, rather than federal agencies, responsible for interpreting and determining the reasonableness of federal rules.

The Financial Industry Regulatory Authority has censured and fined Edward Jones $200,000 for misrepresenting taxable customer interest as tax-exempt and failing to adequately monitor its supervisory systems meant to address short positions the firm had in municipal bonds.

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.

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