SEC Reasonable Basis Standard
By participating in a municipal offering, an underwriter makes an implied recommendation about the securities being offered. The SEC requires that municipal underwriters have a reasonable basis for recommending municipal securities to the public. For both negotiated and competitively bid municipal offerings, the SEC requires underwriters to review the issuer’s disclosure documents for possible inaccuracies and omissions.
When evaluating whether an underwriter has met the requirements for recommending an issue, the SEC and the MSRB will examine the following:
- • Ex