MSRB considers mandatory disclosure of bond ballot contributions

By Angela McDaniels

Tacoma, Wash., June 22 - The Municipal Securities Rulemaking Board is seeking public comment on a proposed amendment to its pay-to-play rules that would require municipal securities dealers and their political action committees to publicly disclose bond ballot contributions, according to an MSRB news release.

The amendment would not ban municipal securities business as a result of contributions to bond ballot measures. Rather, MSRB said it would provide information on whether to consider further action in this area.

"The board believes that public disclosure of bond ballot contributions would shine needed light on this area of the municipal securities business," MSRB executive director Lynnette Kelly Hotchkiss said in the release. "The board is concerned that the private nature of such political contributions by dealers is negatively affecting the integrity of the market. By making these donations public, their potential effects can be fully known."

Existing MSRB rules prohibit dealers from engaging in municipal securities business with municipal bond issuers if certain political contributions have been made.

The MSRB is requesting comment on whether dealer contributions to bond ballot campaign committees have the potential to result in actual pay-to-play practices or the perception of pay-to-play practices.

Bond ballot measure campaigns typically occur as a result of a state or local government placing a ballot measure before voters to approve specified municipal borrowing, the MSRB noted, adding that many state and local jurisdictions are required to authorize the issuance of municipal bonds through voter approval to fund municipal finance projects.

The MSRB also seeks to understand whether dealer contributions to bond ballot campaign committees create any conflict-of-interest issues similar to or different from those raised by contributions to political candidates.

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