MSRB requests SEC approval to keep dealers from consenting to changes in bond authorizing documents

By Jennifer Chiou

New York, Oct. 22 - The Municipal Securities Rulemaking Board announced that its request for approval from the Securities and Exchange Commission of a proposed rule change to MSRB Rule G-11 has been published in the Federal Register.

According to an MSRB release, the rule change would clearly prohibit, except in limited circumstances, brokers, dealers and municipal securities dealers from providing consents to changes in bond authorizing documents.

The board noted that the proposed rule change would enhance protections for existing owners of bonds from changes to those authorizing documents consented to by a dealer in lieu of bond owners by prescriptively prohibiting consents in certain circumstances.

The release added that the MSRB intends to clarify that the proposed rule does not eliminate the obligation of a dealer under Rule G-17 when considering requests from an issuer to consent to changes to an authorizing document. A dealer in those circumstances would also be required to consider whether such action is consistent with its duties of fair dealing.

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