The MSRB filed with the SEC (i) a proposed new rule on advertising by municipal advisors and (ii) amendments to its rule on advertising by municipal securities dealers. The rule and amendments were issued after considering input on a 2017 request for comment on advertising rules.
The proposed amendments to Rule G-21, applicable to dealers, are intended to conform the MSRB advertising rule for dealers to similar rules of other regulators, including by conforming the rule's definition of "form letter" and the FINRA Rule 2210 definition of "correspondence." While the amendments proposed are not substantively new as applied to broker-dealers generally, there is a substantial laundry list of requirements, and firms should consider how those requirements will apply and should be interpreted in the municipals markets.
Concurrent with its efforts to enhance Rule G-21 and promote regulatory consistency among Rule G-21 and the advertising rules of other financial regulators, the MSRB prepared proposed Rule G-40 to apply to advertising by municipal advisors. Similar to proposed amended Rule G-21, proposed Rule G-40 would:
- apply to all "advertisements" by a municipal advisor";
- define the terms "advertisement" and "form letter," and set forth the general standards and content standards for advertisements; and
- require the approval by a principal, in writing, before the first use of an advertisement.
According to MSRB Executive Director Lynnette Kelly, "the proposed new standards for fairness and accuracy in municipal advisor advertising will augment the MSRB's core regulatory framework intended to protect municipal entities and obligated persons . . . [and] is well-tailored for municipal advisors and municipal advisor solicitors but is similar to advertising standards for dealers, which have been in place for nearly 40 years."
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