The Fiduciary of Municipal Advisors and the Application of MSRB G-17 to Municipal Advisors

SIFMA provides comments to the Municipal Securities Rulemaking Board (MSRB) on draft MSRB Rule G-36 relating to the fiduciary duty of municipal advisors, MSRB Notice 2011-14; and draft interpretive notice concerning the application of MSRB Rule G-17 to municipal advisors, MSRB Notice 2011-13.  SIFMA supports the MSRB’s desire to provide guidance to municipal advisors as to the requirements of the fiduciary duty owed by municipal advisors to their municipal entity clients (the G-36 Proposal) as prescribed by Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), as well as to the parameters of the duty of fair dealing owed by municipal advisors to obligated person clients in the context of advisory engagements and owed to municipal entities solicited by municipal advisors on behalf of others (the G-17 Proposal).  However, SIFMA believes that because the Securities and Exchange Commission (SEC) has not yet adopted final rules that would define the scope of activities that trigger municipal advisor registration, and therefore the universe of potential registrants, the proposals interpreting how a fiduciary duty and duty of fair dealing apply to this as-of-yet undefined universe are premature.