MSRB to implement limits to gifts handed out by municipal advisers

By Wendy Van Sickle

Columbus, Ohio, Nov. 9 – The Municipal Securities Rulemaking Board received approval from the Securities and Exchange Commission to limit the size and nature of gifts given by municipal advisers in their professional capacity advising state and local governments, according to a Monday press release.

The new restrictions seek to address conflicts of interest that may arise from gift-giving in connection with municipal advisory activities.

The SEC also approved extending related recordkeeping requirements to municipal advisers. The new regulations, which are effective May 6, 2016, largely conform to existing MSRB regulations on gifts and related recordkeeping for municipal securities dealers, according to the release.

“Applying the MSRB’s existing gifts rule for dealers to municipal advisers will help ensure that municipal advisory business is awarded on the basis of merit and not special favors,” MSRB executive director Lynnette Kelly said in the release.

“The changes approved ... to MSRB Rule G-20 establish common standards for all municipal financial professionals and, together with MSRB’s rules on fair dealing, help preserve the integrity of the municipal market.”

Amended MSRB Rule G-20 will apply to municipal advisers and their associates: The general prohibition of gifts or gratuities in excess of $100 per person per year in relation to the municipal securities activities or municipal advisory activities of the recipient’s employer; the exclusions contained in existing Rule G-20 from that general prohibition and the addition of bereavement gifts to those exclusions; and the existing exclusion relating to contracts of employment or compensation for services.

Rule G-20 will explicitly prohibit dealers and municipal advisers from receiving reimbursement of certain entertainment expenses from the proceeds of an offering of municipal securities.

The MSRB is an Alexandria, Va.-based organization whose mission is to protect investors, municipal entities and the public interest by promoting a fair and efficient municipal market, regulating firms that engage in municipal securities and advisory activities, and promoting market transparency.

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