SEC Proposes Permanent Rule Requiring Municipal Advisors to Register With Agency
The SEC has proposed a rule creating a new process by which municipal advisors must register with the SEC. The proposed rule, required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, would supplant a temporary rule the Commission adopted in September. Because the Act required that these advisors register by Oct. 1, 2010, the Commission adopted its earlier temporary rule on an interim basis so that advisors could fulfill the Act’s mandates.
Municipal advisors provide advice to state and local governments and other borrowers involved in the issuance of municipal securities or with respect to the investment of governmental monies. Municipal advisors also solicit business from a state or local government for a third party. Subject to certain exemptions, the definition of municipal advisor under the Dodd-Frank Act includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and certain swap advisors that provide municipal advisory services.
Under the proposed permanent registration regime, municipal advisors would have to submit more detailed information than is currently required and certify that they have met or will meet the qualifications and regulatory obligations required of them.
In particular, the proposed rule would require:
- A municipal advisory firm to submit a Form MA to register.
- An individual municipal advisor to submit a Form MA-I to register.
- A municipal advisory firm or individual municipal advisor to submit a Form MA-W to withdraw from registration.
- A non-resident municipal advisory firm (and any non-resident general partner or managing agent of a municipal advisory firm) to submit a Form MA-NR in order to appoint an agent for service of process.
Like the temporary form required of municipal advisors (Form MA-T), the registration forms envisioned by the proposed rule would require municipal advisors to provide identifying and contact information, and to disclose — by selecting from a list — the municipal advisory activities in which they engage.
Municipal advisors also would be required to provide disciplinary history information similar to the information that the SEC obtains from registered broker-dealers and investment advisers. Individual municipal advisors would be required to amend the form whenever any of the required information has become inaccurate in any way; and municipal advisory firms would be required to amend the form annually, and whenever identifying and contact information or disciplinary information has become inaccurate.
Municipal advisors can continue to access and complete the temporary registration form (Form MA-T) on the SEC’s website. Information filed by municipal advisors on Form MA-T is made publicly available on the SEC’s website. In addition to registering with the SEC, municipal advisors also must register with the Municipal Securities Rulemaking Board (MSRB).
Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.
Contact Steve Quinlivan for more information.