MSRB Reminds Dealers of Obligations in First "Compliance Advisory"
The MSRB emphasized key compliance risks for brokers, dealers and municipal securities dealers that, "if not properly addressed, could adversely affect municipal entities, obligated persons, investors and public confidence in the municipal securities market." In its 2016 Compliance Advisory for Brokers, Dealers and Municipal Securities Dealers, the MSRB recommended that dealers utilize the publication as a supplementary tool for (i) developing effective policies and procedures for supervision and compliance, and (ii) assessing the adequacy of existing compliance programs.
In the Advisory, the MSRB recommended factors for dealers to consider when evaluating compliance controls and implementing measures to mitigate exposure to compliance risks. These compliance risks included failures:
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to adhere to fair pricing standards and provide best execution (MSRB Rules G-30 and G-18);
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to satisfy suitability obligations (MSRB Rule G-19);
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to disclose material information to customers (MSRB Rule G-47);
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to adhere to Pay-to-Play restrictions (MSRB Rule G-37);
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to deal fairly with all persons in the conduct of municipal securities activity (MSRB Rule G-17);
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to observe prohibitions on underwriting activities when engaged in financial advisory activities (MSRB Rule G-23);
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to adhere to restrictions on gifts, gratuities and non-cash compensation (MSRB Rule G-20);
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to maintain adequate supervisory procedures (MSRB Rule G-27); and
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to observe professional qualification standards (MSRB Rules G-2 and G-3).