MSRB addresses fiduciary duties of muni advisers under Dodd-Frank Act

By Susanna Moon

Chicago, Jan. 31 - The Municipal Securities Rulemaking Board said it approved some draft rulemaking proposals for municipal advisers and dealers at its quarterly board of directors meeting Thursday and Friday in San Diego.

Among the draft rules was one on the fiduciary duties of municipal advisers.

MSRB Rule G-36 and a draft interpretive notice address disclosure of conflicts of interest, conflict waivers with client's informed consent and circumstances under which conflicts may not be waived.

The draft notice also provides guidance on what it means for a municipal adviser to have a duty of care to its municipal client.

The board said that it has been working since October to establish a regulatory framework for municipal advisers based on a set of principles-based rules consistent with provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under the Dodd-Frank Act, municipal advisers have a federal fiduciary duty to their municipal clients, which include state and local governments.

The board said it will publish the draft rule and notice in the coming weeks that provides details of an adviser's duty of loyalty and care to municipal clients.

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