Unregistered Analyst and the Missing Compliance Officer
Your municipal advisory firm has 12 professionals. One senior analyst, Jordan, is not registered as a municipal advisor representative. Jordan builds cash-flow models, drafts responses to issuer RFPs, attends meetings with elected officials, and orally recommends structuring alternatives such as 'use a 10-year par call and level debt service.' Jordan also signs engagement letters as 'project lead.' The firm's compliance officer resigned two months ago; no one is reviewing emails, and Jordan's files are stored only on a personal laptop. A client has asked for copies of emails from last year. The firm is registered with the MSRB and SEC.
1. Do Jordan's activities require registration?
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Yes, likely. Municipal advisor representative registration is required for natural persons who engage in municipal advisory activities on behalf of a municipal advisor, including formulating advice, recommending structures, and communicating with clients. Jordan's activities, building models used to advise, drafting RFP responses, attending issuer meetings, and orally recommending structuring alternatives, go beyond clerical or purely analytical support. Signing engagement letters as project lead reinforces the conclusion. The firm must register Jordan or restrict the activities to supervised, non-advisory tasks.
2. What supervisory and recordkeeping failures exist, and what must the firm do?
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The firm has MSRB Rule G-27 supervisory failures: no designated supervisor, no review of emails, no written supervisory procedures, and no annual compliance review. It also has recordkeeping failures under the MSRB books-and-records and preservation rules (G-8 and G-9): business communications on a personal laptop are firm records and must be preserved and produced. The firm must appoint a supervisor, adopt written supervisory procedures, review and retain communications, migrate records to firm systems, and conduct a look-back. It should also assess whether prior advice was given by an unregistered person and disclose to clients as required.
3. Can the firm produce the emails?
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Yes, if the emails relate to municipal advisory business and are in the firm's possession or control. The firm must produce them, but it must first preserve them and stop any deletion. Personal-device records are still firm records if used for firm business. The firm should image the laptop, collect the emails, review for privilege and confidentiality, and produce them. It should also notify counsel and consider self-reporting to the MSRB and SEC if records were lost.