Federal Securities Laws, MSRB Rules, and Regulatory Requirements
The statutory frame
Exchange Act Section 15B is the foundation. It authorized the MSRB, required municipal advisors to register with the SEC, and preserved the Tower Amendment: issuers are not required to file with the SEC, and the MSRB cannot require issuers to make filings. Section 15B(c) makes MSRB rules binding on dealers and municipal advisors and enforceable by the SEC - the MSRB writes rules and runs a disciplinary system but does not itself bring enforcement actions.
Key rules
Rule 15Ba1-1 defines “municipal advisor” and carves out exclusions: attorneys, accountants, and engineers advising in their professional capacity; broker-dealers acting as underwriters; investment advisers meeting the notice conditions; issuer employees; and persons providing only general information. Rule 15c2-12 governs continuing disclosure. Rule 10b-5 and Securities Act Section 17(a) supply the antifraud overlay.
MSRB rules to know cold
G-42 (fiduciary duty and documentation), G-37 (pay-to-play), G-43 (gifts and payments), G-44 (supervision and compliance), and the fair-dealing standard in G-17. Know that these apply to municipal advisors as well as dealers, though the specific requirements differ.
Traps
- Assuming an attorney advising on a bond deal must register as an MA - usually an exclusion applies.
- Confusing SEC enforcement authority with MSRB rulemaking authority.
- Assuming every antifraud claim requires proof of intent (negligence can suffice under some provisions).
- Believing the Tower Amendment immunizes issuers from antifraud liability - it does not.
Rule of thumb
Separate the three functions: the SEC registers and enforces; the MSRB writes rules, sets qualification standards, and adjudicates; FINRA examines dealer firms. Know which body does which.