The MSRB advised municipal securities issuers against designating or influencing the selection of an underwriter's counsel in the process of offering bonds.
In a Regulatory Notice ("notice"), the MSRB explained that conflicts of interest can arise from an issuer playing a role in the selection of an underwriter's counsel. According to the MSRB, underwriters must maintain their independence in order to effectively perform due diligence responsibilities and make fair assessments. A key resource for an underwriter is the presence of an experienced, unbiased, expert counsel. The MSRB warned that "conflicted loyalties" could arise if an issuer-designated counsel is used, which could call into question the "integrity and thoroughness of the due diligence process as well as the quality of representation provided by such counsel."
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