MSRB floats a draft rule on solicitor muni advisors

This week’s quarterly MSRB board meeting was the first presided over by Mark Kim as CEO.

Dan Nelken

The Municipal Securities Rulemaking Board will seek comment on a new draft rule related to solicitor municipal advisors and look for volunteers to serve on two advisory committees.

Those decisions came out of the MSRB’s first quarterly board meeting of its 2021 fiscal year, which was held remotely Wednesday and Thursday. The meeting was the first since new governance rules kicked in beginning a downsizing of the board, and also the first for Mark Kim as MSRB CEO after being named to that post at the end of September.

Solicitor MAs are muni advisors that, for compensation, solicit municipal entities and obligated persons for business on behalf of certain other financial professionals.

The forthcoming request for comment regarding solicitor MAs is an effort under the MSRB’s retrospective rule review to codify relevant information from the existing guidance on MSRB Rule G-17 into a new draft rule to define their duties.

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The G-17 guidance touches on various duties of solicitor MAs, such as a requirement that they disclose to municipal entities information about their clients and compensation. That guidance also explains that solicitor MAs are not subject to the same fiduciary responsibility to municipal entities that non-solicitor MAs are, because their clients are not the municipal entities but rather other third parties.

The MSRB also determined to continue two advisory committees that it established previously: the Compliance Advisory Group and Municipal Fund Securities Advisory Group. The CAG, first established in fiscal 2018, provides advice to the board on facilitating understanding of MSRB rules. The muni fund group provides advice to the board regarding 529 College Savings and ABLE plans. The MSRB will solicit volunteers and topics for consideration in the coming weeks.

On the governance side, the MSRB announced Friday that it will split its existing Nominating and Governance Committee into two separate committees.

“A standalone Governance Committee ensures a sustained emphasis on upholding the highest standards of board accountability and transparency,” said Board Vice Chair Julia Cooper. “The Nominating Committee will focus on seeking and selecting four new board members to join the board for FY 2022.”

A central topic for the board meeting was the development of a new long-term strategic plan. The MSRB last formulated such a plan four years ago, and Kim said now is “the perfect time” for the MSRB to be doing so again.

The MSRB is seeking a firm to provide facilitation and support services for its strategic planning activities, according to its Friday press release.

The board also agreed to delay once again the deadline for MA principals to pass the Series 54 qualification exam. The deadline was originally next month, but the board decided in April to grant a 6-month extension in light of challenges posed by the COVID-19 pandemic. The new deadline will be Nov. 12, 2021, pending Securities and Exchange Commission approval.

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