Knowing Your Compliance Responsibilities

Transcription

1 Knowing Your Compliance Responsibilities Hotel Monteleone New Orleans October 5 7 Christina Kennedy, Moderator Brian Colton, Speaker Suzanne Harrell, Speaker

2 New Rulemaking G-42: Duties of Non-Solicitor Municipal Advisors G-20: Gifts, Gratuities, Non-cash Compensation and Expenses of Issuance G-37: Political Contributions and Prohibitions on Municipal Securities Business and Municipal Advisory Business G-44: Supervisory and Compliance Obligations G-8/G-9: Recordkeeping 2

3 Maintaining Current Registration SEC: Annual Update to Form MA MSRB: Affirm MSRB A-12 Information MSRB: First G-37 Filing Due October 31 Due 90 Calendar Days after FY year end 17 Business Days after Jan 1 of each year Quarterly NAMA G-37 Webinar on Filing in Mid-October 3

4 Rule G-42: Duties of MA Fiduciary Duty Act Honestly and in the Best Interest of Clients Without Regard to Own Financial or Other Interests Disclosures and Contracts Affirmative Things You Must Do Fair Dealing Prohibitions Things You Can t Do Know Your Client Suitability Document Your Process 4

5 Implementing Procedures Developing Firm Policies and Procedures Educating Team Use of Outside Compliance and Legal Assistance 5

6 Disclosures and Contracts Issuer-Initiated Inquiries for Information MA-Initiated Financing Information Marketing Materials and RFP Responses Ø Follow up with to Document Conversations Ø Some Disclosures Made at Time of Contact, Others at Time of Contract Ø MSRB Advertising Rules for MAs Future NAMA Webinar 6

7 Contracts and Agreements Must Put Relationship with Issuer into Writing 7

8 Contracts and Agreement 8

9 Conflicts of Interest POTENTIAL General Description Must Be Written And Sufficient Description So The Issuer Can Reasonably Determine This Is A Conflict And If It Can Waive The Conflict ACTUAL Specific To The Issuer Details Of Any Known Conflicts Statement That There Are No (Other) Known Conflicts After Reasonable Investigation How Conflicts Are Mitigated ANNUAL CONFERENCE

10 Conflicts of Interest Examples Affiliates Of MA That May Provide Services Directly Relating To The Engagement Any Direct Of Indirect Payment To Obtain Or Retain The Engagement Payment To Third Parties To Recommend The Services Of The MA Fee Splitting Arrangements Contingent Fees 10

11 Mitigating Conflicts of Interest Ø Fees Contingent, Hourly, Fixed Ø Cash Advisory Service/Investment Advisor Ø Other Examples? 11

12 Know Your Client MA Must Use Reasonable Diligence to Determine Suitability Risk Tolerance Financial Situation Applies to Recommendations as well as Review of Recommendations by a Third Party Client Experience/ Sophistication Ability to Administer After Closing 12

13 Suitability Inform the Issuer of the Risks, Potential Benefits, Structure and Other Characteristics of the Transaction or Product Inform the Issuer of the Basis for Reasonably Believing the Transaction or Product is or is not Suitable Inform the Issuer if Other Reasonably Feasible Alternatives were Investigated 13

14 Documentation! Try to Make Documentation Procedure Similar to the Process Already in Place for the Firm ü Checklists ü Form Letters ü Internal Review Be Consistent with Your Procedure Manual 14

15 MSRB RULE G- 37 CONSIDERATIONS Developing Policies and Procedures Contributions to Candidates Contributions to State and Local Political Parties and PACs Fundraisers and Events Bond Ballot Initiatives Contributions to Federal Candidates, Political Parties and PACs

16 MSRB RULE G- 37 CONSIDERATIONS Documentation and Approval Procedures

17 MSRB RULE G- 37 CONSIDERATIONS MSRB Quarterly Filings

18 MSRB RULE G- 20 CONSIDERATIONS General Gifts Meals and Sporting Events Setting De Minimis Amount Special/Situati onal Occasions Holidays Pre-existing Relationship Life Event Charitable Event Purpose of Event/Related to Client Event Ticket and Sponsorships

19 MSRB RULE G- 20 CONSIDERATIONS Setting Approval Standards Documentation and Recordkeeping

20 Supervisory and Compliance/G-44 20

21 Recordkeeping/G-8 and G-9 You Must Evaluate Whether You Have Created And Maintained Sufficient Books And Records To Document MA Activities And SEC/MSRB Administrative Requirements Exchange Act Rule 15Ba1-8 set forth requirements for registration documentation, accounting documentation, and advice shared with clients 21

22 Recordkeeping/G-8 and G-9 Electronic Storage Requirements MSRB Rules G-8, G-9, and G-44 require that we maintain adequate documentation to evidence that MA follows relevant requirements (ex. gifts provided, political contributions, disclosures, supervisory oversight) 22

23 Recordkeeping/G-8 and G-9 Recordkeeping For MA Work Related to Client Due Diligence, Suitability, Scope of Services How Do You Know What To Retain? 23

24 Conclusion Resources Future NAMA Webinars Conclusion /Regulated- Entities/ Municipal- Advisor- News.aspx G-37 Quarterly Filings Questions 24