SEC Approves MSRB Proposal to Apply Reg. BI to Bank Muni Dealers

The SEC approved amendments to MSRB Rules G-19 ("Suitability of Recommendations and Transactions") and G-48 ("Transactions with Sophisticated Municipal Market Professionals") to eliminate the potential for regulatory arbitrage and establish a "uniform standard of investor protection" for transactions in municipal securities by retail investors.

The adopted amendments will generally conform MSRB Rule G-19 to SEA Rule 15l-1 ("Regulation Best Interest") and clarify the scope of its application to municipal securities activities of bank dealers. Additionally, the MSRB amended Rule G-48 to provide that the "quantitative suitability" (or anti-churning) aspect of the rule only applies where the relevant broker-dealer has actual control of the investor's account.

The comment period for the proposed amendments closed on May 31, 2022, and no comment letters were received.