On March 16, 2020, the Securities and Exchange Commission issued a “Coronavirus (COVID-19) Response,” a statement intended to summarize current and prospective operational initiatives, market-focused actions, guidance, certain targeted assistance and relief, investor protection efforts, and other work of the agency in response to the effects of COVID-19. The statement highlights the following primary objectives: (1) maintaining the continuity of commission operations; (2) monitoring market functions and system risks; (3) providing prompt, targeted regulatory relief and guidance to issuers, exchanges, and other registrants impacted by COVID-19, including in connection with the execution of their business continuity plans (BCPs); and (4) maintaining the commission’s enforcement and investor protection efforts, particularly with regard to the protection of market systems and vulnerable investors. SEC Chairman Jay Clayton has also released a General Statement deeming COVID-19 as an “uncertain issue where actual effects will depend on many factors beyond the control and knowledge of issuers.”

The SEC has released a Conditional Exemptive Order that provides targeted regulatory relief in connection with the public disclosure filing obligations of certain private companies but has yet to release any industry-specific guidance that addresses the municipal markets. The SEC’s Office Of Municipal Securities has not yet issued any public statements directed at municipal issuers, underwriters, or other market participants.

Last week, the Municipal Securities Rulemaking Board (MSRB) issued a Regulatory Notice that reiterates the importance of underwriters’ supervisory obligations in light of the present coronavirus crisis. The Notice makes clear that MSRB Rule G-27, which addresses supervisory systems, requires dealers to establish and maintain a system to supervise the municipal securities activities of each registered representative, registered principal, and other associated persons that is reasonably designed to achieve compliance with applicable rules. Furthermore, dealers must adopt, maintain, and enforce written supervisory procedures (WSPs) that, among other things, codify dealers’ supervisory systems for ensuring compliance. Rule G-27 does not mandate that supervision be done in-person, recognizing that technology plays a prominent role in how dealers conduct their supervisory reviews, and a reasonably designed supervisory system could incorporate remote supervision. The MSRB’s Notice applies only to underwriters and does not in any way impact issuers of municipal securities.

If you have any questions regarding this client advisory, please contact a member of our Public Finance Group.