It's not even December, yet that hasn't stopped the MSRB from proposing a change to its Gifts and Gratuities rules.  MSRB proposes the following revisions: 

• Amend Rule G-20, Gifts and Gratuities, to apply the rule to municipal advisors,
• Amend Rule G-8, Books and Records, and Rule G-9, Preservation of Records, for related changes. 
• Clarify that certain interpretations by FINRA gift rules - FINRA Rule 3320 and predecessor NASD Rule 3060, would be applicable to municipal advisors.

The above changes would become effective at the same time that an SEC-approved definition for the term “municipal advisor” goes into effect. 

SUMMARY OF PROPOSED RULE CHANGE.  MSRB Rule G-20 seeks to reduce the potential for conflicts of interest in municipal advisory activities, that that engagements are awarded on the basis of merit, etc.  As proposed, Rule G-20 would:

• prohibit municipal advisors, in connection with their municipal advisory activities, from, directly or indirectly, making a gift or permitting a gift to be made in excess of $100 per year to a natural person other than an employee or partner of the municipal advisor, if such gifts are in relation to the activities of the employer of the recipient of the gift;
• provide certain exemptions from the above prohibition, including: (i) occasional gifts of meals or tickets to theatrical, sporting, and other entertainments hosted by the municipal advisor; or (ii) legitimate business functions sponsored by the municipal advisor that are recognized by the IRS as deductible business expenses;
• permit contracts of employment or compensation for services rendered by a person other than an employee of the municipal advisor;  provided that there is a written agreement between the municipal advisor and the person who is to perform such services, prior to the time of employment or before the services are rendered;
• remove gifts of reminder advertising as a permissible exemption from the $100 gift limit of Rule G-20(a) for municipal advisors and dealers;  and
• clarify that existing FINRA and NASD interpretations of the FINRA and NASD gift rules, respectively, apply to comparable MSRB provisions of Rule G-20 applicable to municipal advisors, with new FINRA interpretations of its gifts rule made applicable to municipal advisors if the MSRB determines that it is appropriate to do so.

Municipal advisors would not be subject to Rule G-20(d), which relates to non-cash compensation in connection with primary offerings.

Proposed amendments to MSRB Rule G-8 and Rule G-9.  The proposed amendments to Rules G-8 and G-9 would subject municipal advisors to the same recordkeeping and record retention requirements to which dealers would be subject under amended Rule G-20.

MSRB Staff Contacts:  Direct questions to:   Peg Henry, Deputy General Counsel;  Leslie Carey, Associate General Counsel, at (703) 797-6600.   For further details, go to:   [MSRB Notice 11-38, 8/4/11]