Rule G-17

SEC Approves MSRB Interpretive Notice on Duties of Underwriters to State and Local Government Issuers

On May 4, the SEC approved the MSRB’s proposed interpretive notice on the application of MSRB Rule G-17 to underwriters of municipal securities. According to the notice, underwriters of municipal securities will be required to make certain disclosures to their state and local government clients, including risks about complex financial transactions, potential conflicts of interest, and compensation received from third-party providers of derivatives and investments. The notice will become effective on August 2. MSRB Release.  MSRB Notice.  SEC Release.

MSRB Request for Comment on Bondholder Consent Proposal

On February 7, the MSRB requested comments on a draft proposal on the circumstances under which municipal bond underwriters would violate their duty to deal fairly by consenting to certain amendments to bond authorizing documents. The proposal would describe circumstances where an underwriter’s consent to an amendment would violate Rule G-17’s requirements that brokers, dealers, and municipal securities dealers deal fairly with all persons in the conduct of their municipal securities activities. Comments must be submitted by March 6. MSRB Release. Draft Proposal.

Application of MSRB Rules to Underwriters of Municipal Securities

On August 2, pursuant to Section 975 of the Dodd-Frank Act, the MSRB requested approval from the SEC for an interpretive notice relating to the application of MSRB Rule G-17 to underwriters of municipal securities. The notice would set forth requirements for underwriters regarding representations and disclosure to issuers. The MSRB anticipates the proposed notice will be effective 90 days after approval by the SEC. MSRB Release. MSRB Notice.