MSRB Seeks Comments on the Use of Social Media

The Municipal Securities Rulemaking Board (“MSRB”) is seeking comments from regulated entities and other stakeholders about draft answers to frequently asked questions (“FAQs”) addressing the use of social media in advertising by municipal advisors and municipal securities dealers and their associated persons.  As the effective date of new MSRB Rule G-40 on advertising by municipal advisors nears, the MSRB developed the draft FAQs to enhance market participants’ understanding of permissible and impermissible uses of social media in the context of MSRB advertising regulations and certain other MSRB rules and provide direction by the regulated entities as they develop their compliance policies and procedures.

Rule G-40, which becomes effective on February 7, 2019, sets forth general provisions, addresses professional advertisements by municipal advisors, and requires principal approval, in writing, for advertisements by municipal advisors before their first use. The general provisions: (i) define key terms, including the term “advertisement;” (ii) provide content standards, such as the requirement that an advertisement be based on the principles of fair dealing and good faith and be fair and balanced; and (iii) provide general standards for advertisements, namely that a municipal advisor shall not publish or disseminate an advertisement that the municipal advisor knows or has reason to know contains any untrue statement of material fact or is otherwise false or misleading. Additionally, Rule G-40(a)(iv)(G) prohibits a municipal advisor, directly or indirectly, from publishing, circulating or distributing any advertisement which refers, directly or indirectly, to any testimonial of any kind concerning the municipal advisor or concerning the advice, analysis, report or other service rendered by the municipal advisor.

MSRB is seeking comments regarding the content and appropriateness of the proposed FAQs, as well as the usefulness of the draft responses, in part to ensure the FAQs provide practical compliance assistance.  Therefore, before publication, the MSRB has specifically requested comment on the following questions:

  • Do the proposed responses to the FAQs add to the understanding of the rule?
  • How could they be improved to provide greater understanding?
  • Are the examples presented practical and helpful in understanding the application of the rule to municipal advisory client lists and case studies?
  • Do the examples realistically reflect the use of a municipal advisory client list or case study by a municipal advisor?

Comments should be submitted no later than September 14, 2018.  For the full text of the request for comment, Click Here.