Application of MSRB Rule G-17 to Underwriters of Municipal Securities

SIFMA provides comments to Municipal Securities Rulemaking Board (MSRB) on a draft interpretive notice concerning the application of MSRB Rule G-17 to underwriters of municipal securities, MSRB Notice 2011-12.  Under Rule G-17, an underwriter is required to “deal fairly with all persons and shall not engage in any deceptive, dishonest, or unfair practice.” SIFMA believes that the MSRB should be careful not to transform the duty of fair dealing into a fiduciary-type obligation that imposes burdensome, expensive and unnecessary affirmative obligations by interpreting a prohibition on deception and fraud. Underwriters are not municipal advisors, and the standards applicable to each should be clearly distinguishable.