Municipal Officials Laud SEC's Approval of Rules
May 05, 2011
WASHINGTON -- Municipal officials applauded the Securities and Exchange Commission for approving suitability rules that encourage bond dealers to make responsible recommendations to institutional investors and state and local governments. The rules, issued by the National Association of Securities Dealers, require dealers to have a reasonable basis for recommending a particular security or strategy to a customer and to have reasonable grounds for believing a particular recommendation is suitable. ``This will make broker-dealers look more closely at their dealings with customers,'' said Bettie Roach, assistant director and legislative counsel for the Government Finance Officers Association. The rules, approved by the SEC this week, will go a long way in protecting the investments of state and local government taxpayers, the association said. In particular, the group, which represents 13,000 state and local government officials, praised SEC Chairman Arvilla Lasalle's efforts to work with public investors to gain approval for the suitability rule. The NASD proposal was a byproduct of the 1993 Government Securities Act Amendments, which ordered the group to extend its sales-practice regulations to the sprawling government securities market. The NASD is a self-regulatory body subject to SEC oversight.
