Background: Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act makes several changes to the oversight of the municipal securities market. As most applicable to SEC rulemaking, it amends section 15B of the Securities Exchange Act of 1934 to require the registration of municipal advisors with the Commission and provide for their regulation by the Municipal Securities Rulemaking Board (MSRB). Municipal advisors include financial advisors to states and local governments and obligated persons1 with respect to the issuance of municipal securities or the investment of bond proceeds; swap advisors to municipal issuers and conduit borrowers; and third-party solicitors2 of business (in connection with municipal securities products) for brokers, dealers, municipal securities dealers, other municipal advisors, or investment advisers. The Dodd-Frank Act also includes a specific antifraud prohibition and imposes a fiduciary duty on municipal advisors.
Implementation: In September, 2010, the Commission adopted an interim final rule establishing a temporary means for municipal advisors to satisfy the registration requirement.
In December, 2010, the Commission proposed a permanent rule creating a new process by which municipal advisors must register with the SEC.
On September 18, 2013, the Commission adopted final rules for the registration of municipal advisors. (Release No. 34-70462)
1 “Obligated person” means any person who is committed to support the payment of the obligations on the municipal securities sold in an offering.
2 “Solicitation” in this context means a communication with a municipal entity or obligated person made by a person (for compensation) on behalf of a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of engaging a municipal entity or obligated person for or in connection with municipal financial products, or engaging an investment adviser to provide investment advisory services to or on behalf of a municipal entity.