Distinguishing Between Loans And Municipal Securities

Law360, New York (October 6, 2011, 5:24 PM EDT) -- On Sept. 12, 2011, the Municipal Securities Rulemaking Board (“MSRB”) issued Notice 2011-52 titled “Potential Applicability of MSRB Rules to Certain ‘Direct Purchases’ and ‘Bank Loans.'" The notice has provoked some consternation in the secondary market for commercial bank loans because the notice suggests that certain transactions characterized as “loans” in the municipal market may in fact qualify as securities under the federal securities laws pursuant to the U.S. Supreme Court’s ruling in Reves v. Ernst & Young Inc., 494 U.S. 56 (1990).[1]

The notice states...
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