Registration of Municipal Advisors
A Small Entity Compliance Guide1
On September 20, 2013, the Securities and Exchange Commission adopted new rules and forms to establish a registration regime for municipal advisors. These new rules and forms implement Section 975 of the Dodd-Frank Act, which amended Section 15B of the Securities Exchange Act of 1934. Section 15B of the Exchange Act requires municipal advisors to register with the SEC.
The new rules and forms will take effect on January 13, 2014, and there will be staggered compliance dates for using the final forms to register under the permanent registration regime based on a municipal advisor’s temporary municipal advisor registration number:
Who is required to register as a municipal advisor?
You are required to register if you are a “municipal advisor.” A municipal advisor is a person (who is not a municipal entity or an employee of a municipal entity) that provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, or that undertakes a solicitation of a municipal entity or obligated person.
However, as provided by the statute, the following types of people are excluded from the definition of municipal advisor, but only if they engage in the specific activities set out in Rule 15Ba1-1(d)(2):
The Commission has exempted the following types of people from the definition of municipal advisor, but only if they engage in the specific activities set out in Rule 15Ba1-1(d)(3):
The Commission has also exempted natural person municipal advisors if the advisor is an associated person of a SEC-registered municipal advisor and engages in municipal advisory activities solely on behalf of the registered municipal advisor.
What are the filing requirements related to municipal advisor registration?
A partnership, corporation, trust, limited liability company, limited liability partnership, sole proprietorship, or other organized entity that engages in municipal advisory activities (“municipal advisory firm”) must register with the SEC on Form MA. A municipal advisory firm must file annual updates to Form MA, and file an amendment whenever a material event has occurred that changes the information provided in the form. A non-resident municipal advisory firm must promptly file an amendment to Form MA to attach an updated opinion of counsel after any changes in the legal or regulatory framework or the firm’s physical facilities that would impact the ability of the firm, as a matter of law, to provide the SEC with access to its books and records or to inspect and examine the firm.
A municipal advisory firm must complete and file Form MA-I for each natural person associated with the firm who engages in municipal advisory activities on the firm’s behalf. A natural person doing business as a sole proprietor must complete and file Form MA-I in addition to Form MA. Form MA-I must be promptly amended whenever any information previously provided on Form MA-I becomes inaccurate.
A municipal advisory firm that is a non-resident of the United States must file a completed and executed Form MA-NR. Also, a municipal advisory firm must file a separate Form MA-NR for every general partner and/or managing agent of the firm that is a non-resident, and every non-resident natural person associated with the firm and engaged in municipal advisory activities on the firm’s behalf. A new Form MA-NR must be filed promptly if a previously-filed Form MA-NR becomes invalid or the information in it becomes inaccurate.
A business entity (including a sole proprietorship) that is registered as a municipal advisor but is no longer required to be registered must file Form MA-W to withdraw its registration.
Detailed instructions for registration, amendments, and withdrawal are set out in Instructions for the Form MA Series, available at http://www.sec.gov/rules/final/2013/34-70462.pdf.
What other requirements have been adopted for municipal advisors?
All registered municipal advisors are required comply with the books and records requirements set out in Rule 15Ba1-8.
The adopting release for the registration of municipal advisors can be found on the SEC’s website at http://www.sec.gov/rules/final/2013/34-70462.pdf.
The proposing release can be found on the SEC’s website at http://www.sec.gov/rules/proposed/2010/34-63576.pdf.
The text of the rules can be accessed through http://www.sec.gov/about/laws/secrulesregs.htm#sea34.
Contacting the SEC
The SEC’s Office of Municipal Securities is available to assist small municipal advisors and others with questions regarding the municipal advisor registration requirements. You can contact the Office for this purpose at (202) 551-5680.
1 This guide was prepared by the staff of the U.S. Securities and Exchange Commission as a "small entity compliance guide" under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains rules adopted by the SEC, but is not a substitute for any rule itself. Only the rule itself can provide complete and definitive information regarding its requirements.