BDA Submits Comment Letter to the SEC on MSRB Customer Complaint and Record Keeping Rule Amendments

BDA Submits Comment Letter to the SEC on MSRB Customer Complaint and Record Keeping Rule Amendments

 

On December 9, 2016, BDA submitted a comment letter to the SEC on the proposed amendments that the MSRB filed to MSRB Rules G-8, G-9, G-10, and G-32 with the SEC. 

BDA Letter Summary:

  • BDA argues that MSRB should have published a request for comment before filing this proposed rule change with the SEC
  • The letter states that the proposed complaint and record keeping system for municipal advisors is not appropriate given the nature of the municipal advisory business and how it differs from the investor-dealer relationship and suggests that the rule should be limited to material complaints
  • BDA urges the MSRB to design an entirely new brochure for municipal advisory clients
  • The letter urges the MSRB to publish the municipal securities problem codes prior to finalizing the amendments to MSRB Rule G-8 for dealers
  • MSRB and FINRA should develop a harmonized problem codes 
  • Dealers should have 1 year to implement the changes as opposed the the proposal’s six-month timeframe
  • For municipal advisors, BDA requests clarity that the requirement to deliver the investor brochure under the proposed G-10 ‘promptly’ means promptly relative to the start of the relationship
  • Requests 12 month implementation timetable 

List of Proposed Amendments that would Impact Dealers:

Page 5-6 of the filing has a comprehensive list of the MSRB’s amendments and the regulated entity impacted by each proposed amendments. The dealer-specific impact list is below.

MSRB Rule G-8 (Books and Records)

  • Amendment would require dealers to keep a standardized, municipal security specific complaint log
  • Amendment to define written customer complaints to include electronic complaints
  • Amendment to provide guidance to define electronic record keeping
  • Amendment to provide guidance to remind dealers that they may be required to promptly report certain written complaints to other regulators

MSRB Rule G-10 (Delivery of Investor Brochure)

  • Amend G-10 in its entirety to more clearly focus on customer protection by requiring the dealer or MA to deliver, at least annually, investor education information, including a notification regarding the existence of the investor brochure to the dealer customer or MA client. This amendment would replace the current G-10 requirement to deliver the investor brochure after receiving a complaint 

Proposed Effective Date:

  • MSRB has proposed an effective date of six months after the rule is finalized by the SEC

We hope this information is helpful. Please contact the BDA with questions or comments.

Jessica Giroux at jgiroux@bdamerica.org
John Vahey at jvahey@bdamerica.org
Justin Underwood at junderwood@bdamerica.org