MSRB Published Revised FAQs with Respect to New MSRB Rule G-40

On September 17, 2018, the Municipal Securities Rulemaking Board (“MSRB”) published a revised set of frequently asked questions (“FAQs”) regarding the application of MSRB Rule G-40 to advertising by municipal advisors.

The MSRB received approval from the Securities Exchange Commission (“SEC”) with respect to Rule G-40 in May 2018. The rule becomes effective February 7, 2019 and addresses general advertising provisions and professional advertisements by municipal advisors. Additionally, the rule requires advertisements to obtain municipal advisor principal approval in writing before first use. Under the new provisions, the rule also

• defines the term “advertisement”;
• defines standards for the content of advertisements;
• defines standards for advertisements as a whole, most importantly specifying that municipal advisors must not publish or disseminate any advertisement that contains any false and/or misleading statement;
• prohibits a municipal advisor from publishing, circulating, or distributing any advertisement which refers to any testimonial concerning the municipal advisor or any advice, analysis, report, and/or other service rendered by the municipal advisor.

The revised FAQs also provide guidance regarding the following scenarios:

• Whether MSRB Rule G-40 considers municipal advisor client lists and case studies to be advertisements
• Whether or not MSRB Rule G-40(a)(iv)(G)’s ban on the use of testimonials in advertising would prohibit a municipal advisor from using municipal advisory client lists and case studies
• Considerations regarding the use of partial municipal advisory client lists under MSRB Rule G-40
• Standards that apply to a municipal advisor’s use of case studies

The MSRB’s revised FAQs include examples that clarify additional elements of the rule:

• Allowed uses of a municipal advisory client list and/or case studies
• Whether a response to a request for a proposal qualifies as an advertisement under MSRB Rule G-40
• How to use municipal advisory client lists and/or case studies in “pitch” books and/or tombstones, and whether or not these would fall under MSRB Rule G-40