More On Legal & Compliancefrom The Advisor's Professional Library
- Meeting and Exceeding Clients and Regulators’ Expectations Although it can be difficult, there are ways for RIAs to meet or exceed client expectations, increase customer satisfaction, and help firms retain current clients and attract new ones.
- The New and Improved Form ADV Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.
The Municipal Securities Rulemaking Board released for comment Thursday its rule proposal, Rule G-42, on standards of conduct and duties of municipal advisors when engaging in municipal advisory activities other than the undertaking of solicitations.
The proposal states that “irrespective of any fiduciary duties, draft Rule G-42 subjects municipal advisors to a duty of care in the conduct of their municipal advisory activities. In addition, draft Rule G-42 requires municipal advisors to disclose conflicts of interest and certain other information to their clients and document their municipal advisory relationship.”
Lynette Kelly, MSRB’s executive director, said on a call with reporters that the rule proposal “focuses on the core standards of conduct” to which municipal advisors should adhere, including their fiduciary duties.
Kelly said that the proposed rule “strikes an appropriate balance and that the proposal is workable for municipal advisors of all sizes.”
Comments on the proposed rule will be taken until March 10.
MSRB says that it invites comments on, for instance, whether draft Rule G-42 “appropriately limits the application of the fiduciary duty to municipal advisors’ municipal entity clients, or should extend such fiduciary duty to all clients, including obligated persons, under the MSRB’s issuer protection mandates.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act charged the MSRB with developing standards of conduct and qualification for municipal advisors to help safeguard the interests of state and local governments that engage the services of municipal advisors.
In September, the Securities and Exchange Commission issued final rules on municipal advisors, including defining what municipal advisory activity requires registration with the SEC. The SEC also designated FINRA as the examination and enforcement authority for municipal advisors that are regulated by FINRA. The final rules become effective Jan. 13.
Accordingly, FINRA listed “municipal advisory activity” as one of its areas of focus in sales practice examinations in 2014.
A FINRA spokesperson told ThinkAdvisor Thursday that FINRA “will be reviewing for compliance with the SEC’s final rule on registration of municipal advisors and, to the extent MSRB rules regarding municipal advisors become effective this year, we will review for compliance with those as well.”
Check out SEC, FINRA Enforcement: Muni Firm Fined Over Sports Ticket Gifting on ThinkAdvisor.