MSRB Proposes Conduct Rule for Duties of Non-Solicitor Municipal Advisors

The MSRB filed a rule proposal with the SEC concerning the core duties of care and loyalty owed to state and local governments and other clients by municipal advisors.

The MSRB proposed the creation of a new MSRB Rule G-42 which would, among other things, establish core standards of conduct for municipal advisors, provide guidance on the obligations and prohibitions that accompany their federal fiduciary duty to state and local governments, and clarify their duties of care and fair dealing to all clients.

Key provisions of the rule, as outlined by the MSRB, address the following:

• the fiduciary duty owed by a municipal advisor to its municipal entity clients;
• the duty of care owed by a municipal advisor to its municipal entity and obligated person clients;
• full and fair disclosure of conflicts of interest;
• documentation of the municipal advisory relationship;
• the suitability of recommendations; and
• specific prohibitions and limitations, regarding principal transactions, compensations and fees.

See: MSRB Executive Summary; MSRB Press Release. Related news: SEC Approves MSRB Proposal to Create Professional Qualification Standards for Municipal Advisors (Fed. Reg.) (March 4, 2015); MSRB to Amend Its Rules to Create Professional Qualification Standards for Municipal Advisors (Notice 2015-04) (March 2, 2015); SIFMA Submits Comment Letter to SEC Regarding MSRB Professional Qualification Requirements for Municipal Advisors (January 5, 2015); MSRB-Proposed Professional Qualification Standards for Municipal Advisors Published (Fed. Reg.) (December 5, 2014); MSRB Proposes Professional Qualification Standards for Municipal Advisors (November 19, 2014).