Underwriters of municipal securities will be required to make extensive new disclosures in writing to issuers of municipal securities beginning August 2, 2012 under an interpretation of Municipal Securities Rulemaking Board Rule G-17 (the Notice) approved by the Securities and Exchange Commission. Rule G-17 is known as the "fair dealing rule" and requires underwriters and other parties regulated by the Municipal Securities Rulemaking Board (MSRB) to deal fairly with all persons as well as prohibits deceptive, dishonest, or unfair practices. The Notice interprets Rule G-17 to require underwriters to provide issuers specific detailed written disclosure on matters ranging from the underwriters role in the transaction to specific conflicts of interest. Among many notable features, it requires the underwriter to "reasonably believe that the official to whom disclosures are addressed is capable of independently evaluating the disclosures" and if not, "the underwriter must make additional efforts reasonably designed to inform the official or its employees or agent." The Notice addresses the duties of underwriters to the municipal entity issuer of municipal securities. It does not address the duties of underwriters to obligated persons. It further applies only to negotiated underwritings, except where competitive underwritings are specifically mentioned, and does not apply to selling group members. We provide a summary of the Notice and its requirements and reminders below. You will find a link to the Notice at the end of this Client Alert. We encourage you to review it and the accompanying MSRB commentary in their entirety.

The Notice is important for Underwriters because it establishes requirements they must meet under federal securities law; for Issuers because they are to receive the disclosures required and, in some instances, expected to provide written acknowledgement; and for Counsel in municipal securities transactions because it may affect their clients and disclosure and documentation relating to a transaction.