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July 05, 2011 at 08:38 AM
The Municipal Securities Rulemaking Board (MSRB) sent a notice on July 5 stating it had become aware of firms engaging in municipal advisory activities without being registered with the Securities and Exchange Commission (SEC) or MSRB—which is a violation of the Exchange Act and rules of both agencies.
The notice warns municipal advisors that if MSRB receives information indicating violations of these registration requirements, it “intends to refer the matter to the appropriate regulatory authority for investigation and possible enforcement action.”
“It has come to our attention that some municipal advisors are providing municipal advisory services without first registering with the SEC and MSRB, as required by law,” said MSRB Executive Director Lynnette Kelly Hotchkiss, in a statement. “The MSRB is concerned that these firms may not be aware of their legal obligations, including the federally established fiduciary duty owed their municipal entity clients” under the Dodd-Frank Act.
The MSRB notice says that “unregistered municipal advisory firms may be unaware that they–and individuals associated with them–owe a federal fiduciary duty to municipal entity clients for whom they provide municipal advisory services.” The notice goes on to state that municipal entities and obligated persons that retain municipal advisor firms to verify their registration status with the MSRB and the SEC.
