Comments Filed on MSRB Rule G-42


Today BDA filed comments to the MSRB regarding their proposed Rule G-42 on duties of non-solicitor municipal advisors, available [here].
BDA will host a conference call Wednesday, March 12 at 4pm ET to discuss these comments, the outcome of a recent meeting with MSRB and also the status of a second round of SEC FAQs.  A call-in will be provided via a separate email.
Highlights of BDA’s comments include the following:
  • Principal Transactions – the MSRB has set forth a proposal that is overly broad and seemingly counter to the SEC approach to limit the prohibition on “role-switching” to specific issuances or transactions;
  • Fiduciary Standard – the proposed fiduciary standard should more appropriately mirror existing fiduciary standards utilized in the legal profession such that conflicts can be disclosed and potentially waived as opposed to mandating blanket prohibitions;
  • Obligated persons – the MSRB should avoid ensnaring obligated persons which may not desire or require the protection of the rule;
  • Review of the Official Statement – if a Municipal Advisor (MA) is assigned the role of developing the OS, there should not be a mechanism for that MA to opt out of performing a thorough review;
  • Documentation of the Municipal Advisory Relationship – only when advice is given such that the municipal entity desires and expects that advice to carry a fiduciary duty should the relationship be required to be evidenced in writing;
  • Economic Analysis – small MAs should not be exempted from the requirements of the rule;
  • Disclosure of Liability Insurance Coverage – MAs should be required to disclose the mechanism and amount of financial resources that would be available to a municipal entity client if needed;
  • Recommendations and suitability – if a client has stated its goals and objectives, the MA should not need to step into the shoes of the client to examine, analyze or assess the client’s stated objective or goals.


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