Broker-dealers sometimes act as “financial advisors,” but often have conflicts of interest with local governments. Broker-dealers (also known as “underwriters” or bond purchasers) will sometimes purchase bonds themselves without taking bids from any other broker-dealers! This can result in the city paying significantly higher interest rates on its bonds, because broker-dealers are also trying to satisfy their clients (i.e., investors) who would like to buy bonds at the highest possible interest rate. (Even if a broker-dealer does take bids from other firms, federal law prohibits them from bidding, resulting in a diminished bidding pool and placing the local government at a competitive disadvantage – in apparent violation of their fiduciary duties.)

How can I be sure my Financial Advisor is NOT a “broker-dealer” or an “underwriter” ?
Simply check with the MSRB by clicking the “Advisor Check” link in YELLOW below.

That is why it is important to have an independent financial advisor. In fact, a new federal law requires financial advisors (sometimes called “municipal advisors”) to always act in the best interests of local governments as they guide clients through the bond process. How can a city ensure that their Financial Advisor is not a “broker-dealer,” but instead is a truly independent advisor? It’s easy. Search the list of Municipal Advisors maintained by the MSRB (the Municipal Securities Rulemaking Board) at the link in yellow below.

"Municipal Advisor"

If listed only as a “Municipal Advisor,” that firm has a fiduciary duty under federal law to always put their clients’ interests first!

“Municipal Advisor/Broker Dealer”

If listed as a “Municipal Advisor/Broker Dealer,” the firm has potential conflicts of interests that could be detrimental to bond issuers.

The link above points to a list of Municipal Advisor Registrants maintained by the MSRB (Municipal Securities Rulemaking Board).

For example, a search for our firm reveals…

Municipal Advisor

Citycode Financial is ONLY a "Municipal Advisor" representing bond issuers.

Our firm is NOT a broker-dealer. We are required by federal law to put our clients’ interest first. Therefore, we do NOT have investor-clients seeking bonds with the highest interest rate.


Recent incidents in Kansas due to “conflicted advisors” (using a broker-dealer or underwriter)

  • No bids are taken on bond issues

    We are still seeing bonds sold without taking bids – likely resulting in the far higher interest rates than necessary.

  • "Advisors" buying bonds

    A city recently received advice from a “financial advisor” that then proceeded to purchase the bonds as an “underwriter” rather than taking bids. (Fines were levied recently against that firm and the individual advisors in March 2016.)

  • Bonds issued when not prudent to do so

    We are seeing many “advanced” refundings that are urged by bond underwriters (“conflicted” advisors) which provide fees to underwriters, even though it may not be in the best interests of the municipality.

  • No advisor used at all

    Some bonds have been issued with no Financial Advisor to protect the local government’s interest.

  • Reduced number of bond bidders

    When a broker-dealer/underwriter acts as “financial advisor,” that firm is legally barred from bidding on bonds. This “blacklisting” limits the competitiveness of the bonds – which can result in higher interest rates for the local government. Municipal advisors are to always put their clients’ interest before their own!