WASHINGTON - Securities and Exchange Commission Chairman Mary Schapiro today said the SEC is embarking on a nationwide inquiry into municipal securities that will lead to specific recommendations for changes to laws and regulations to better protect investors and the market.

The inquiry will be led by SEC Commissioner Elise Walter and will involve a series of field hearings that will be held across the country to solicit views from municipal market participants.

Schapiro also called for broker-dealers to be prohibited from serving as financial advisers to municipal issuers and then turning around and underwriting bonds from those issuers. Although the Municipal Securities Rulemaking Board’s Rule G-23 permits dealers to switch roles in this fashion, Schapiro said, “This is a classic example of a conflict of interest” and the MSRB “should change G-23 and forbid this practice.”

Schapiro made the remarks in a speech that was read by Andrew “Buddy” Donohue, head of the SEC’s division of investment management at the Investment Company Institute’s annual conference here this morning. Schapiro was supposed to have delivered the speech but was unable to attend the meeting because the SEC was busy looking into yesterday’s stock market plunge.

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