The Municipal Securities Rulemaking Board is currently asking for public comment on several rulemaking proposals and draft interpretive guidance, including the proposed Rule G-36, a new fiduciary duty rule for municipal advisors. Comment is also being sought on proposed rule amendments and guidances related to gifts by municipal advisors and fair practice duties of underwriters.
Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is extending the MSRB’s authority to municipal advisors. Under Section 975, municipal advisors have a federal fiduciary duty to clients. MSRB has been directed to implement this requirement. Our institutional investment fraud lawyers would like to remind investors that breach of duty by investment advisers and brokers can be grounds for a securities fraud case when investor losses result.
The draft interpretive guidance regarding advisors’ fiduciary duty address a number of issues, including duty of care, conflicts of interest disclosures, and when conflicts of interest can be waived by a client’s informed consent. The proposed guidance would require municipal advisors to have a fiduciary duty to clients under federal law—not just a fiduciary duty under state and common laws.
The MSRB is also asking for public comment on draft interpretive guidance related to the extension of Rule G-17 to municipal advisors. Also called the “fair dealing” rule, Rule G-17 specifies a code of conduct for all individuals and entities that the MSRB regulates. The draft guidance gives details about how the rule applies to municipal advisers. The MSRB also wants public comment on interpretive guidance of Rule G-17 to underwriters. Both municipal advisers and underwriters would be required to disclose material terms, proposed transaction risks, and related conflicts and incentives to clients.
Related Web Resources:
MSRB, in ‘Coming Weeks,’ to Seek Comment On Rule Proposals, Draft Interpretive Notices, BNA/Broker Dealer Compliance Report, February 2, 2011
MSRB Looking at Pension Disclosure, Bond Buyer, January 31, 2011
More Blog Posts:
JPMorgan Chase & Co. CEO Warns Municipal Bond Investors to Expect More Bankruptcies, Institutional Investor Securities Blo, January 18, 2011
Class Action Plaintiffs Dispute Bank of America’s $137M Settlement with State Attorney Generals Over Municipal Derivatives, Institutional Investor Securities Blog, December 31, 2010
Bank of America to Pay $137M Over Alleged Investment Scam To Pay Municipalities Low Interest Rates on Investments and $9M Over Alleged Bid-Rigging Scheme to Nonprofits, Institutional Investor Securities Blog, December 16, 2010
Contact our securities fraud attorneys by email or call (800) 259-9010