New Year Brings MSRB Advertising Rule Change

Back in May, the Municipal Securities Rulemaking Board (MSRB) received approval from the Securities and Exchange Commission (SEC) to amend MSRB Rule G-21, on advertising by broker-dealers or municipal securities dealers, and to adopt new MSRB Rule G-40, on advertising by municipal advisors. The accepted changes are set to take effect February 7, 2019.

Existing MSRB Rule G-21, which regulates municipal securities advertisement, will be amended to (i) offer specified content standards for advertisements by broker-dealers or municipal securities dealers, (ii) harmonize regulatory requirements with FINRA for general standards for advertisements, and (iii) codify MSRB interpretive guidance with respect to many of the MSRB’s fair practice and fair-dealing obligations that follow from the MSRB’s requirements set forth in Rule G-21.

New MSRB Rule G-40 will be adopted, and will specifically relate to advertising by municipal advisors in addressing professional advertisements and requiring principal approval for any advertisements by municipal advisors prior to their initial use. Lastly, existing MSRB Rule G-42 will be changed to incorporate a technical amendment correcting a cross-reference to the term “municipal advisor” defined in Rule G-42. To read the complete MSRB Notice, “SEC Approves Advertising Rule Changes for Dealers and Municipal Advisors,” click here.

In addition, to assist municipal advisors with their compliance with Rule G-40, the MSRB recently provided guidance relating to the use of municipal advisory client lists and case studies. These FAQs can assist municipal advisors with their compliance with the MSRB’s advertising rule. In addition, these FAQs illustrate the potential application of certain other MSRB rules to municipal advisors’ use of municipal advisory client lists and case studies.

A copy of that compliance resource can be found here.