MSRB spells out newly expanded duties of muni underwriters to clients

By Susanna Moon

Chicago, July 18 - The Municipal Securities Rulemaking Board is providing guidance to underwriters to state and local governments under their expanded legal obligations.

Beginning Aug. 2, underwriters of municipal securities must disclose information about their role in a municipal bond transaction, risks about complex financial transactions, potential conflicts of interest and compensation received from third-party providers of derivatives and other investments, according to a press release by the MSRB.

"The new implementation guidance reiterates the principles underlying the interpretive notice and provides practical considerations for underwriters to bear in mind when evaluating their activities and procedures for compliance," the release said.

The expanded obligations of municipal underwriters are outlined in an interpretive notice to MSRB Rule G-17 on fair dealing that was approved by the Securities and Exchange Commission on May 4. The interpretive notice also describes fair dealing responsibilities of underwriters in connection with their representations to issuers and with financial aspects of an underwriting.

The implementation guidance supplements other educational materials the MSRB has provided on underwriters' new obligations to state and local governments, the release added.

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