The SEC Office of Compliance Inspections and Examinations ("OCIE") issued a Risk Alert identifying compliance deficiencies that the OCIE found during a recent examination of newly registered municipal advisors. The OCIE found frequent deficiencies regarding municipal advisors' compliance with applicable registration, recordkeeping and supervisory regulations.

The OCIE stated that deficiencies regarding registration obligations often come from failures by municipal advisors to register with the SEC or MSRB, submit annual updates and amendments, accurately submit required information, pay fees, and properly withdraw from registration. With respect to recordkeeping, the OCIE noted frequent deficiencies that arise from firms failing to (i) maintain copies of communications related to municipal advisory activities, (ii) retain documents used in connection with recommendations to municipal entities or obligated persons, (iii) maintain accurate general ledgers and (iv) maintain proper records of cash receipts and disbursements.

The OCIE outlined municipal advisor supervisory obligations pursuant to MSRB Rule G-44, and noted that firms often failed to (i) implement systems reasonably designed to achieve compliance with all applicable rules, (ii) maintain adequate written supervisory procedures, and (iii) designate a principal to be responsible for supervisory activities.

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