Comment Deadline Set for MSRB Proposal on Duties of Solicitor Muni Advisors

Comments on an MSRB proposal to establish core standards of conduct and duties for "solicitor municipal advisors" are due by March 7, 2023. The SEC notice was published in the Federal Register.

As previously covered, the proposal would establish new MSRB Rule G-46 ("Duties of Solicitor Municipal Advisors") to provide standards of conduct for solicitor municipal advisors when "engaging in solicitation activities that would require them to register with the SEC and the MSRB." In the rule filing, solicitor municipal advisor is generally defined as any municipal advisor that is not a "non-solicitor municipal advisor."

The proposed rule would require solicitor municipal advisors to (i) provide full and fair written disclosure regarding any material conflicts of interest and material legal or disciplinary events to solicitor clients, and (ii) disclose material facts related to the solicitation including the advisor's role and compensation and material conflicts of interest. The proposed rule would also prohibit such advisors from (i) publishing any materially false or misleading information regarding the capacity, resources or knowledge of the solicitor client, and (ii) delivering inaccurate invoices or making payments for the purpose of retaining a municipal advisory activity engagement.

In addition, the proposal would codify previously issued interpretive guidance concerning the requirements applicable to solicitor municipal advisors under MSRB Rule G-17 ("Conduct of Municipal Securities and Municipal Advisory Activities"), MSRB Rule G-42 ("Duties of Non-Solicitor Municipal Advisors") and IAA Rule 206(4)-1 ("Investment Adviser Marketing"). Further, it would add specific recordkeeping obligations for solicitor municipal advisors under MSRB Rule G-8 ("Books and Records to be Made by Brokers, Dealers, and Municipal Securities Dealers and Municipal Advisors") with respect to solicitation of advisory services.