MSRB seeks SEC approval of pay-to-play rules for municipal advisers

By Tanya Meyer

Chicago, Dec. 16 – The Municipal Securities Rulemaking Board filed proposed new federal regulations with the Securities and Exchange Commission on Wednesday that would prohibit pay-to-play practices by municipal advisers who hire outside financial professionals.

If approved by the SEC, the rule provisions would be the first to specifically address the activities of those who solicit business from municipal entities on behalf of third-party municipal securities dealers, municipal advisers and investment advisers, according to a news release.

The proposed amendments to MSRB Rule G-37 would provide more transparency and curb political contributions to state and local officials in exchange for municipal advisory business.

Consistent with the MSRB’s rule for municipal dealers, the new regulations would prohibit advisers from conducting business with municipal entities for two years if political contributions were made to influence business.

Municipal advisers would also be required to disclose political contributions to municipal entity officials and bond ballot campaigns on the MSRB’s Electronic Municipal Market Access website.

The MSRB is a Washington, D.C.-based self-regulatory organization that was created under the Securities Acts Amendments of 1975.

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