1. MSRB Regulatory Notice 2019-04 MSRB Identifies Priority Rules for Retrospective Review in 2019

    In October 2018, the Board identified the ongoing retrospective rule review efforts as a strategic priority for its current fiscal year and subsequently developed criteria to help identify priority rules or rule areas for review. The Board has now prioritized for retrospective review: MSRB Rule G-23, on activities of financial advisors, and a newly implemented requirement under MSRB Rule G-34, on CUSIP numbers, new issue and market information requirements. In addition, the Board has approved the filing with the U.S. SEC of proposals to eliminate MSRB Rule G-29, which requires dealers to maintain a copy of the MSRB rulebook in each office in which certain municipal securities activities are conducted, and to update certain outdated references in and make other technical corrections to MSRB rules.

    2/5/2019

  2. MSRB Information Notice 2019-03 MSRB Extends Effective Date for Amendments to MSRB Rule G-21 and New MSRB Rule G-40

    The MSRB today filed a rule change with the SEC to extend the effective date of amendments to Rule G-21, on advertising by brokers, dealers or municipal securities dealers, and the adoption of Rule G-40, on advertising by municipal advisors (together the “advertising rules”). The rule change became effective upon filing pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. The advertising rules for brokers, dealers or municipal securities dealers and municipal advisors were approved by the SEC on May 7, 2018, with an initial effective date of February 7, 2019. The new effective date of the advertising rules will be not more than 6 months following an announcement by the MSRB in an MSRB Notice to be published on the MSRB’s website. The MSRB expects to announce the new effective date within 60 day

    1/28/2019

  3. FINRA Regulatory Notice 19-04 FINRA’s 529 Plan Share Class Initiative Encourages Firms to Self-Report Potential Violations

    Over the past several years, FINRA has found that some firms have failed to reasonably supervise brokers’ recommendations of multi-share class products. FINRA has raised concerns specifically regarding firms’ supervision of share-class recommendations to customers of 529 savings plans. FINRA is launching a 529 Plan Share Class Initiative to promote firms’ compliance with the rules governing 529 plan recommendations, to promptly remedy potential supervisory and suitability violations related to recommendations that customers of 529 plans buy share classes that are inconsistent with the accounts’ investment objectives, and to return money to harmed investors as quickly and efficiently as possible. As described in this Notice, to encourage voluntary reporting under this initiative, FINRA’s Department of Enforcement will recommend that FINRA accept favorable settlement terms for firms that self-report these potential violations and provide FINRA with a detailed remediation plan.

    1/28/2019

  4. FINRA Information Notice 1/17/19 October 2018 Supplement to the Options Disclosure Document

    The SEC approved the October 2018 supplement to the Options Disclosure Document (ODD). The ODD contains general disclosures on the characteristics and risks of trading standardized options. The October 2018 supplement (i) amends and restates in its entirety the April 2015 Supplement, which accommodated foreign index options and certain implied volatility index options;2 (ii) provides additional contract adjustment disclosures regarding thedetermination of contract adjustments by OCC rather than adjustment panels and the manner in which certain adjustments may affect an option’s value; and (iii) reflects T+2 settlement. As with other supplements to the ODD, this should be read in conjunction with the current ODD, Characteristics and Risks of Standardized Options.

    1/17/2019

  5. Cboe Options Regulatory Circular 18-050 Prearranged Trades

    This Regulatory Circular restates policy concerning prearranged trading. Trading Permit Holders/Members are cautioned that any purchase or sale transaction or series of transactions, coupled with an agreement, arrangement, or understanding, directly or indirectly to reverse such transaction which is not done for a legitimate economic purpose or without subjecting the transactions to market risk, violates Exchange Rules and may be inconsistent with various provisions of the Securities Exchange Act of 1934, as amended, (the “Act”) and rules thereunder. All transactions must be effected in accordance with applicable trading rules, must be subject to risk of the market, and must be reported for dissemination.

    12/27/2018

  6. MSRB Regulatory Notice 2018-33 MSRB Files Content Outline for the Municipal Advisor Principal Qualification Examination (Series 54)

    The MSRB filed the Series 54 examination content outline with the SEC for immediate effectiveness. The Series 54 examination content outline has been developed to assist municipal advisor principal candidates in preparing for the Series 54 examination and sets forth key concepts and rules to be tested on the examination and the percentage of the examination devoted to each topic area. The Series 54 examination content outline, which is available on the MSRB’s website, describes the following three topical sections comprising the examination: (1) Understanding the Municipal Advisor Regulatory Framework (25 questions); (2) Supervising Municipal Advisory Activities (35 questions); and (3) Supervising Municipal Advisor Firm Operations (40 questions). Additionally, to familiarize individuals with the format of the Series 54 examination, the content outline includes sample questions similar to the type of questions that may be found on the Series 54 examination.

    12/20/2018

  7. SEC Release No. 33-10593 Disclosure of Hedging by Employees, Officers and Directors

    A new rule Dodd-Frank Wall Street Reform and Consumer Protection Act requires a company to describe any practices or policies it has adopted regarding the ability of its employees (including officers) or directors to purchase financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the employee or director. The new rule requires a company to describe the practices or policies and the categories of persons they affect. If a company does not have any such practices or policies, the company must disclose that fact or state that hedging transactions are generally permitted. The new disclosure is required in a proxy statement or information statement relating to an election of directors.

    12/20/2018

  8. MSRB Regulatory Notice 2018-32 MSRB Provides Compliance Resource on Application of Content Standards to Advertisements by Municipal Advisors under MSRB Rule G-40

    The revised compliance resource is designed to provide practical assistance to municipal advisors with their understanding of Rule G-40’s content standards through the analysis of mock advertisements. The MSRB derived the principles discussed in this compliance resource from Rule G-40 and its related rulemaking record, and this compliance resource should be read in conjunction with Rule G-40 and its related guidance. The compliance resource does not create new legal or regulatory requirements or new interpretations of existing requirements. The MSRB does not intend for this compliance resource to be interpreted by municipal advisors or examining authorities as establishing new standards of conduct.

    12/19/2018

  9. SEC Release No. 33-10580 Covered Investment Fund Research Reports

    The Commission is adopting a new rule under the Securities Act of 1933 to establish a safe harbor for an unaffiliated broker or dealer participating in a securities offering of a covered investment fund to publish or distribute a covered investment fund research report. If the conditions in the rule are satisfied, the publication or distribution of a covered investment fund research report would be deemed not to be an offer for sale or offer to sell the covered investment fund’s securities for purposes of sections 2(a)(10) and 5(c) of the Securities Act of 1933. The Commission is also adopting a new rule under the Investment Company Act of 1940 to exclude a covered investment fund research report from the coverage of section 24(b) of the Investment Company Act, except to the extent the research report is otherwise not subject to the content standards in self-regulatory organization rules related to research reports. We are also adopting a conforming amendment to rule 101 of Regulation M, and a technical amendment to Form 12b-25.

    11/30/2018

  10. MSRB Regulatory Notice 2018-30 SEC Approves Amendments to MSRB Rule G-3 to Establish a Municipal Advisor Principal Qualification Examination

    The MSRB recently received approval from the SEC to amend MSRB Rule G-3, on professional qualification requirements, to require municipal advisor principals – those who engage in the management, direction or supervision of the municipal advisory activities of the municipal advisor and its associated persons – to pass the new Municipal Advisor Principal Qualification Examination (“Series 54 examination”) to become appropriately qualified as a municipal advisor principal. The amendments to Rule G-3 also (i) require individuals who cease to be associated with a municipal advisor for two or more years, at any time after having been qualified as a municipal advisor principal, to requalify by examination unless a waiver is granted; (ii) add the Series 54 examination to the list of qualification examinations for which an individual can seek a waiver; and (iii) provide that municipal advisor representatives may function as a principal for 120 calendar days without being qualified with the Series 54 examination. The rule changes will become effective on December 20, 2018.

    11/28/2018

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