The Municipal Securities Rulemaking Board (the “MSRB”) recently issued proposed amendments to three of its rules concerning gifts and gratuities: Rule G-8, G-9, and G-20. In its current form, Rule G-20 prohibits brokers and securities dealers from giving gifts or gratuities worth more than $100 to individuals or entities that could have an influence in their hiring. The proposed amendment to G-20 would extend similar limitations to municipal advisors. Similarly, the proposed amendments to Rules G-8 and G-9, which currently impose requirements on brokers and dealers with respect to the maintenance and preservation of records, seek to extend such requirements to municipal advisors.
The MSRB has issued the proposed amendments in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which directs the MSRB to adopt rules for municipal advisors designed to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade. Under the Dodd-Frank Act, “municipal adviser” is defined as a person who provides advice to or on behalf of a municipal entity or other borrower with respect to municipal financial products or the issuance of municipal securities. In its notice requesting public comment on the proposed amendments, the MSRB has noted that such amendments are based on the definition of “municipal advisor” contained in the Dodd-Frank Act, rather than the definition used by the Securities and Exchange Commission (“SEC”) in its proposed permanent registration rule for municipal advisors. If the SEC adopts the registration rules in their current form, however, the MSRB has indicated that it may revise its draft amendments accordingly. See Exchange Act Release No. 34-63576 here.