The SEC’s Office of Investor Education and Advocacy issued an Investor Bulletin to help educate investors about municipal bonds.   For additional assistance, they're advised to call the Office of Investor Education and Advocacy at 1-800-SEC-0330.   For further details, click onto:  [ SEC Investor Bulletin: Focus on Municipal Bonds ]

[C-I Note:  SEC seems concerned about individual investors buying inappropriate muni bond securities and muni bond products.] 

From a compliance standpoint, we'd expect the regulators to elevate their examination scopes in the area of municipal bonds and products.  There's a number of interesting compliance risks that a regulator - say, the SEC, FINRA, the MSRB, NASAA - might want to consider testing (especially if such investigations or exams could bring in some fines revenue).  

• Suitability will loom larger as more municipalities dance around the prospects of bond defaults.  The regulators would certainly like to know if brokers "did their homework" before recommending a municipal security or product to an elderly customer.  Which leads us to: 
• Books and Records - as in order tickets.  A FINRA examiner, for example, might be surprised to find that a large and diverse number of customers made coincidental "unsolicited" purchases of municipals.  After further review, the examiner determines the orders were, in fact, solicited - which would make the order tickets, undoubtedly marked "unsolicited," as prima facie evidence for books and records violations.  [And anyway, munis usually are sold, not bought.]
• Muni Finance Due Diligence - regulators will look for thorough due diligence by underwriters or other deal participants - particularly relating to financial projections  This, in turn, lead to:
• Prospectus Disclosures - Full disclosure's a must - the offering's risks, the underwriters' conflicts of interest, among other things.
• Political contributions - by certain firm employees will be scrutinized for compliance with Rule G-36.