United States: Updates On Municipal Advisor Registration Requirements

SEC Extends Temporary Registration Requirements for Municipal Advisors; MSRB Imposes Additional Registration Requirements

In our prior alerts, we reported that under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the temporary rule promulgated by the Securities and Exchange Commission (SEC) thereunder, all municipal advisors were required to register with the SEC on or before Oct. 1, 2010, and to disclose certain information, such as prior disciplinary actions or proceedings. This disclosure requirement was designed to assist municipalities in retaining a qualified financial advisor.

Since our last alert regarding municipal advisors (Sept. 20, 2010), the SEC extended this temporary registration period, which was scheduled to end on Dec. 31, 2011. Additionally, the Municipal Securities Rulemaking Board (MSRB) has promulgated proposed and final rules that impose, among other things, a separate registration requirement for municipal advisors.

Municipal Advisors

Generally, a municipal advisor is any person or entity that (a) provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products (e.g., swaps and other derivatives, guaranteed investment contracts and investment strategies), or the issuance of municipal securities; or (b) undertakes a solicitation of a municipal entity with respect to municipal financial products, investment advisory services or the issuance of municipal securities.

Examples of entities that may qualify as municipal advisors include guaranteed investment contract brokers, financial advisors, third-party marketers, placement agents, solicitors, finders and swap advisors. The following are NOT generally municipal advisors: municipal entities and their employees, brokers, dealers, municipal securities dealers serving as underwriters, investment advisors providing investment advice, certain commodity traders, and attorneys providing traditional legal services.

Implications of Extension for Municipal Advisors

Beginning on Sept. 1, 2010, municipal advisors were required to register with the SEC by completing Form MA-T through the SEC's website. This registration requirement was put in place as a temporary measure to allow the SEC time to promulgate a permanent registration rule. The temporary registration period was set to expire on Dec. 31, 2011, at which time a new registration regime under the permanent rule was scheduled to have been in place. In December 2011, the SEC extended its temporary registration requirement to Sept. 30, 2012. Thus, absent any further action by the SEC in the interim, all municipal advisors that are currently registered with the SEC under the original temporary registration rule will not have to take any additional registration action until Sept. 30, 2012. Any individual or entity qualifying as a municipal advisor under the Dodd-Frank Act prior to Sept. 30, 2012, and that has not yet registered with the SEC, must complete Form MA-T.

MSRB Registration Requirements for Municipal Advisors

In addition to registering with the SEC, municipal advisors must register with the MSRB before engaging in municipal securities and advisory activities. To do so, a municipal advisor has to provide the MSRB with its SEC registration number, file the appropriate forms electronically on the MSRB's website and pay an initial fee of $100. Following the initial registration, a municipal advisor also must pay an annual fee of $500 for each fiscal year in which the advisor conducts municipal advisory activities. The annual fee must be received by the MSRB no later than Oct. 31 of the fiscal year for which the fee is paid.

Other MSRB Rules That Apply to Municipal Advisors

In addition to the registration requirement, the MSRB currently imposes a few other requirements on municipal advisors. By way of example, all municipal advisors are required to maintain an e-mail account and appoint a person to act as a primary contact with the MSRB. Municipal advisors must update this information within 17 business days after the end of each calendar year. In addition to the fiduciary obligation of municipal advisors to their clients imposed by the SEC, the MSRB imposes a broad duty to "deal fairly with all persons" and prohibits municipal advisors from engaging in any "deceptive, dishonest, or unfair practice."

The MSRB has proposed a number of additional rules for municipal advisors, but they are currently delayed. The MSRB has indicated that it plans to implement its broadened statutory mandate under the Dodd-Frank Act by adopting a comprehensive set of rules for municipal advisors that seek to prohibit fraudulent and manipulative practices; set forth municipal advisors' fiduciary obligation to their municipal clients; require fair treatment of investors, municipal entities, and other market participants; and restrict real and perceived conflicts of interest. The proposed rules are also intended to ensure rigorous standards of professional qualification and promote market efficiency.

One such proposed rule would prohibit publication or dissemination of any advertisement relating to municipal securities of the issuer that the municipal advisor knows or has reason to know to be materially false or misleading. Further, the proposed rule would impose an even stricter standard on any advertisement of a municipal advisor's professional services. Such advertisements may not be materially false or misleading, regardless of a municipal advisor's actual knowledge of any false or misleading content.

SEC Examinations

Currently, the SEC's Office of Compliance, Inspections and Examination is preparing procedures for conducting examinations of independent, non-dealer municipal advisors to determine their compliance with the rules pertaining to municipal securities.

In the coming months, we will continue to monitor rules and regulations promulgated by the SEC and the MSRB pursuant to the Dodd-Frank Act, as well as any other related guidance from federal agencies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions