More On Legal & Compliancefrom The Advisor's Professional Library
- Anti-Fraud Provisions of the Investment Advisers Act RIAs and IARs should view themselves as fiduciaries at all times, whether they meet the legal definition or not. Deviating from the fiduciary standard of full disclosure while courting clients may cause the advisor significant problems.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
(Updated on 3/3/10 10:00 a.m.)
The Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) are teaming up to more closely monitor and regulate the municipal bond market and industry.
SEC Chairman Mary Schapiro and IRS Commissioner Doug Shulman signed a Memorandum of Understanding (MOU) on March 2 which the two agencies say is designed to improve compliance with SEC and IRS rules and regulations related to municipal securities. The SEC states in its release announcing the venture that the muni bond market currently totals about "$2.8 trillion in outstanding securities and continues to grow in complexity and size."
"Through cooperative relationships like this, we are better positioned to protect investors and ensure they are getting the information they need when investing in municipal securities," said Schapiro, in the release.
"As part of the regulatory community overseeing the municipal bond market, we are encouraged by today's announcement," MSRB Executive Director Lynnette Kelly Hotchkiss told Investment Advisor in an email. "Compliance with municipal market rules and effective enforcement are vital for investor protection. An agreement between the SEC and the IRS makes sense, given how closely intertwined securities and tax law requirements can be for municipal securities. The MSRB will continue to provide support for the two agencies wherever possible."
The SEC and IRS said that the two agencies will work "cooperatively to identify issues and trends related to tax-exempt bonds in the municipal securities industry and to develop strategies to enhance performance of their respective regulatory responsibilities." To support this effort, the two agencies say they will work through a standing Tax Exempt Bond/Municipal Securities Committee to discuss policy, procedures, and compliance issues.
The SEC and IRS will also share information as appropriate regarding market risks, practices and events related to municipal securities, among other things, the two groups say. In addition, the two agencies will collaborate on educational and other types of outreach efforts.