Non-Solicitor Municipal Advisor Prohibitions
Rule G-42 specifically prohibits a non-solicitor municipal advisor from doing the following:
•Being compensated excessively for its activities
•Providing an invoice that contains material inaccuracies
•Providing any information that it knows or should know is false or misleading when attempting to secure a municipal advisory relationship
•Being involved in a fee-splitting arrangement with an underwriter on a transaction for which it is or has been a municipal advisor
•Paying to obtain a municipal advisory relationship, except when:
»The payment is to an affiliate who will contact the municipal entity on the advisor’s behalf
»The payment is to another municipal advisor who will contact the entity on the advisor’s behalf
»The payment is part of “normal business dealings”
•Engaging in a principal transaction with the municipal client, with a narrow exception for fixed-income transactions (Treasury, agency, or corporate debt for non-escrow accounts) when the MA is a registered broker-dealer and proper disclosure has been made and client consent has been obtained
The municipal advisor would be considered to be engaging in a principal transaction if it sells a security to or purchases a security from the municipal client for the advisor’s own account.
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Summary Table Non-Solicitor MA Prohibitions |
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Prohibitions |
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•No excessive compensation •No materially in |