In recent months, the U.S. Securities and Exchange Commission has announced that it will soon begin regular examinations of broker-dealers in an effort to improve compliance with their due diligence obligations when participating in an underwriting of municipal bonds.
In response, the Financial Industry Regulatory Authority, the largest independent regulator for securities firms in the United States, has announced that it will begin conducting examinations to confirm broker-dealers’ compliance with such obligations. For issuers preparing for an offering of municipal securities, this likely will entail a significantly increased due diligence exercise, including greater or expanded due diligence memoranda, conference calls, checklists, requests for documents and records, on-site review sessions and other methods of information gathering, in an effort by underwriters and their counsel to document compliance.
