The regulators are in a tough position. Not only is the pandemic news bad for many municipal issuers, the prognosis may be worse. Further, as SEC Chair Clayton and Director Olsen observe, the "municipal securities market is dominated by retail investors," largely because of the tax benefits provided to taxable holders of municipal securities (i.e., many investors in the municipal securities markets are not sophisticated and are the types of investors most in need of protections).

How…

The GAO recommendations illustrate trade-offs inherent in many regulatory decisions. For example, the more demanding that regulators are as to AML reviews (and the tougher the punishments for AML failures), the more likely it is that a bank will determine not to do business with legitimate businesses. That is, banks will limit their exposure if they determine they cannot readily obtain information that insulates them from regulatory risk.

The MSRB proposal aligning its rules with Regulation Best Interest is analogous to recently proposed . In both cases, the SEC's takeover of much of the regulation on suitability substantially diminishes the role of the self-regulatory organizations as conduct arbiters.

While OFAC did not assess a monetary penalty, it did indicate that the failure of technology was a "critical shortcoming" of the financial institution's compliance program - and something that a "large, commercially sophisticated financial institution" probably should have detected. These comments signal the importance of regularly checking all technology systems (not just sanctions systems) for various kinds of failures, though whether the failure was one that could have been caught through…