In a new Compliance Advisory, the MSRB highlighted several factors for a municipal advisor to consider when evaluating internal policies and procedures. The MSRB intends for the advisory to be used as a resource to assist municipal advisors in continuing efforts to comply with MSRB rules. The MSRB highlighted the following:
- Supervisory and Compliance Obligations of Municipal Advisors ( Rule G-44): A municipal advisor is required to take into account, among other things, the firm's size, structure, number of offices, related legal history of its associated persons, and any signs of inconsistent behavior or misconduct when establishing its supervisory processes.
- Duties of Non-Solicitor Municipal Advisors ( Rule G-42): Rule G-42 provides certain standards of conduct for municipal advisors that engage in municipal advisory activities. When performing municipal advisory activities for municipal entity clients, a municipal advisor is subject to a fiduciary duty and must fulfill a duty of loyalty. Advisors should evaluate whether the writings that document municipal advisory relationships aptly describe the scope of the activities to be performed.
- Gifts, Gratuities and Non-Cash Compensation ( Rule G-20): An advisor should assess whether a firm has a process to educate its associated persons on the restrictions in Rule G-20 regarding accepting gifts or gratuities. In addition, an advisor should consider the extent to which entertainment that is hosted by the firm may engender a conflict of interest.
- Political Contributions and Prohibitions on Municipal Advisory Business ( Rule G-37): An advisor should take into account whether the firm has a process to monitor the amount and recipient of contributions made by the firm.
- Conduct of Municipal Advisory Activities ( Rule G-17): An advisor should be aware of whether the firm has procedures that address its process for releasing material facts about a solicitation to the municipal entity or obligated person being solicited.
- Standards of Professional Qualification and Professional Qualification Requirements ( Rules G-2 and G-3): Advisors should examine their procedures relating to the monitoring of associated persons that are not properly qualified in order to make sure that such individuals are not engaging in municipal advisory activities without the necessary qualifications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.