Under MSRB rules, does it matter whether the underwriting is competitive bid or negotiated for the prohibition on a financial advisor acting as underwriter?

• A. It matters; the prohibition only applies to negotiated
• B. It matters; it applies only to competitive bid
• C. It does not matter; the advisor cannot be the underwriter in either case
• D. It matters only if compensation is disclosed

Answer: (C)

The key idea is that the prohibition on a municipal advisor acting as underwriter is about the advisor’s dual role creating a conflict of interest, not about how the underwriting is conducted. Under MSRB rules, a municipal advisor cannot take on the underwriter role for an issue they have advised on, period. This applies regardless of whether the issue is sold via a competitive bid or through a negotiated underwriting. The reason is to preserve the advisor’s independence and avoid biased guidance that could favor the underwriter or issuer’s preferred outcome. So the method of underwriting doesn’t change the restriction—the advisor cannot be the underwriter in either case. Compensation disclosure or the specifics of the bidding process do not alter this prohibition.