SEC Looks For Better Pay-To-Play Ban Compliance
The U.S. Securities and Exchange Commission said Friday it is looking for stronger compliance with a rule that clamped down on so-called pay-to-play practices among underwriters and other professionals in the municipal bond market.
The SEC, which approves and enforces rules for the $3.7 trillion market, issued a risk alert that it said had been triggered by practices spotted by SEC examiners "that raise concerns about firms' compliance with their obligations under MSRB Rule G-37."
That Municipal Securities Rulemaking Board rule is aimed at prohibiting muni firms from doing business with muni bond issuers like states and cities in the wake of certain political contributions to officials of the issuing entity. It also requires firms to disclose contributions and other information.
The SEC's alert cited four areas of concern -- compliance with a ban on doing business with an issuer within two years of a political contribution, possible record-keeping violations, failure to file accurate and complete political contribution information with regulators, and inadequate supervision.
"We hope that by describing practices that our examiners have observed, we will promote compliance by helping firms to consider how each of them can most effectively meet their obligations under MSRB rules," Carlo di Florio, director of the SEC's Office of Compliance Inspections and Examinations, said in a statement.