SIFMA Comments to SEC on Proposed Amendments to Rule G-23

Release Date: March 22, 2011
Contact: Katrina Cavalli, 212.313.1181,  

SIFMA Comments to SEC on Proposed Amendments to Rule G-23 

New York, NY, March 22, 2011—Today, SIFMA filed a letter to the Securities and Exchange Commission with comments relating to the proposed amendments to Rule G-23: Activities of Financial Advisors.    

In the letter, SIFMA managing director and associate general counsel Leslie Norwood, notes:  “Although SIFMA continues to believe that the long and successful history of current Rule G-23 supports our contention that it represents a balanced approach to the issues surrounding potential conflicts of interest in the context of the underwriting activities of financial advisors to municipal entities, we have endorsed certain portions of the Proposed Amendments. We also understand the many concerns and perspectives expressed through comment letters filed with the Municipal Securities Rulemaking Board in connection with the Proposed Amendments. With the advent of the registration of municipal advisors and their prescribed fiduciary duties, we believe that many of these concerns will be more than adequately addressed. And, although we believe certain aspects of the Proposed Amendments may have adverse consequences to the market for municipal securities and municipal issuers themselves, the most significant of which we describe below, overshadowing all of this is the fact that there remains considerable uncertainty over the scope of the fiduciary standard for advisors to municipal entities.

“Understanding the scope of the fiduciary standard is critical to determining the proper scope and application of Rule G-23. For example, the notice accompanying the Proposed Amendments describes the parameters of underwriting and financial advisory relationships with municipal entities, which are not in sync with the definition of “municipal advisor” in Section 15B(e)(4) of the Securities Exchange Act of 1934, as amended, and the Commission’s interpretations thereof.

“In addition, the MSRB has proposed Rule G-36, which will govern the activities of municipal advisors’ relationships with municipal entities, as well as draft interpretive notices concerning the application of MSRB Rule G-17, all in an attempt to sort out the issues relating to the duties of persons advising municipal entities various capacities. Neither the MSRB Proposals nor the Commission’s interpretations have been finalized, and both have been subject to considerable comment and debate. Moreover, we are hopeful that these standards will be appropriately harmonized, including with respect to the Commission’s remaining mandate to define the fiduciary duties of municipal advisors.

“Moving forward with the Proposed Amendments prior to such harmonization would create unnecessary confusion and uncertainty in the markets, and may well require subsequent amendments to Rule G-23. Until the fiduciary standard proposals and related definitions and interpretations of the Commission and the MSRB have been finalized, we strongly believe that any actions to revise Rule G-23 would be premature. Accordingly, we respectfully request that the Commission’s consideration of the Proposed Amendments be tabled until final rules implementing and harmonizing the standards promulgated by the Commission and the MSRB are firmly in place.”


The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers.  SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets.  SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).  For more information, visit




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In New York:
Katrina Cavalli


 Liz Pierce



In Washington:

Carol Danko

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