MSRB withdraws proposed amendments about independence of board members

By Angela McDaniels

Tacoma, Wash., Oct. 4 - The Municipal Securities Rulemaking Board withdrew its proposed amendments to MSRB Rule A-3, which addresses membership on MSRB's board of directors.

The proposed amendments "faced unexpected opposition despite the MSRB's goal of attracting additional investor experience to its board," according to an MSRB news release.

The board has 21 members. Eleven are independent of any municipal securities broker, municipal securities dealer or municipal adviser, and 10 are associated with a broker, dealer, municipal securities dealer or municipal adviser.

Independence means an individual is not and, within the last two years, was not associated with a regulated entity, and the individual does not have a relationship with any regulated entity, whether compensatory or otherwise, that reasonably could affect the independent judgment or decision making of the individual.

MSRB proposed changing the rule in order to exclude fewer candidates from board membership. For example, under the rule, a candidate whose only affiliation with a broker-dealer registered with the MSRB is due to the individual's position as an independent director on the board of directors of a company that is in the same corporate family as the broker-dealer would be disqualified from joining the MSRB board as a public representative.

Under the withdrawn amendment, independence would have meant an individual is not, and within the last two years, was not an officer, director (other than as an independent director), employee or controlling person of any regulated entity.

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