SIFMA Recommends Modifications to MSRB-Proposed Rule on Duties of Non-Solicitor Municipal Advisors

SIFMA recommended modifications to MSRB proposed rules on duties of non-solicitor municipal advisors. In a comment letter, SIFMA contended that the proposed Rule G-42 has "outstanding issues that need to be amended or clarified" before approval by the SEC.

Among SIFMA's criticisms were the following: (i) the proposed transaction ban in Proposed Rule G-42(e)(ii) is more restrictive and inflexible than fiduciary obligations under any other financial regulatory regime; (ii) the MSRB crafted a "one-size-fits-all" rule by applying the same standards and obligations to all "municipal advisory activities" in general regardless of the context of the advice; (iii) the proposed obligation to investigate the accuracy of client representations imposes unnecessary costs on municipal entities; and (iv) the duty of care in the proposal should be clarified to place the responsibility squarely on the back of a municipal advisor for performing the reasonable diligence of any portion of the official statement that the municipal advisor assisted in preparing.