SEC approves amendments to MSRB Rule G-3

Municipal advisors will gain a bit of career flexibility under rule amendments the Securities and Exchange Commission approved Tuesday.

The SEC approved the Municipal Securities Rulemaking Board’s amendments to Rule G-3 on professional qualification requirements in addition to related changes to Rule G-8 on books and records.

The amendments create a new criteria-based exemption that allows individuals who have previously qualified as municipal advisor representatives to forego retaking their Series 50 or Municipal Advisor Representative Qualification Examination, and replaces the current provision requiring waivers for extraordinary circumstances.

“The adoption of amended Rule G-3 and the related amendments to Rule G-8 serves to promote greater flexibility for individuals seeking other career opportunities within the municipal securities industry (i.e. working for a municipal entity or dealer) or stepping away for family needs or educational pursuits, while maintaining protection of municipal entities, obligated persons and the public interest,” the MSRB said.

The amended rule creates a one-time exemption for municipal advisor representatives no later than one year after their two-year lapse in qualification. It also clarifies language for those dually registered as a dealer and municipal advisor.

“If an individual associated with such firm ceases to be engaged in activity requiring qualification as a municipal advisor representative and instead engages only in municipal securities business on behalf of the firm for a period of two or more years, then that individual’s municipal advisor representative qualification would have lapsed, notwithstanding the fact that such person remains associated with a firm that is also a registered municipal advisor, ” the MSRB said.

MSRB Rule G-3 now has nine criteria-based conditions that must be met in order for an individual to take advantage of the exemption, including the requirement that the qualified individual must hold the MA representative qualification for at least three consecutive years before being able to take advantage of the exemption.

Susan Gaffney, executive director of the National Association of Municipal Advisors, said that she particularly appreciates the MSRB’s attention to how one-person firms will be able to comply with these changes.

The board initially sought comment on the proposed amendments following its October 2022 board meeting and filed its amendments with the Commission in July.