The SEC issued on September 1, 2010 an interim final temporary rule that establishes a means for “municipal advisors” to register on a temporary basis with the SEC prior to October 1, 2010, as required by Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Such temporary registration will, in most cases, expire on December 31, 2011.
The temporary rule is effective through December 31, 2011, and will be followed by a final SEC rule that will establish the permanent manner of registration of municipal advisors and prescribe an applicable form for registration.
Who is Required to Register?
“Municipal advisors” are persons that provide advice to, or solicit, “municipal entities” or persons obligated to support the payment of obligations under municipal securities with respect to municipal derivatives, guaranteed investment contracts or investment strategies or the issuance of municipal securities. “Municipal entities” include states and municipalities, as well as agencies and plans established by them, and other issuers of municipal securities.
In general, municipal advisors may include financial advisors, guaranteed investment contract brokers, placement agents, solicitors, finders and swap advisors. However, the following persons are not considered municipal advisors: employees of municipal entities; broker-dealers or municipal securities dealers serving as underwriters; SEC-registered investment advisers providing investment advice; CFTC-registered commodity trading advisors providing advice related to swaps; and, in most cases, attorneys or engineers.
Current municipal advisors should register with the SEC by filing electronically new Form MA-T prior to October 1, 2010.
Form MA-T requires applicants to provide basic contact details, information concerning the categories of municipal advisory activities conducted by the applicant and information concerning the disciplinary history of the applicant and its associated municipal advisor professionals. The questions regarding disciplinary history are largely drawn from Form BD (which is the form used by broker-dealers to register with the SEC). In addition, SEC-registered broker-dealers and investment advisers may cross-reference, to a certain extent, disciplinary information contained in their Form BD or Form ADV, as applicable.
“Associated municipal advisor professional” includes, among others, employees, officers and directors of a municipal advisor who are primarily engaged in municipal advisory or solicitation activities. However, because the term also sweeps in persons directly or indirectly controlling, controlled by, or under common control with, a municipal advisor or its employees who are engaged in, or direct or manage, such activities, gathering the necessary information may prove challenging for some applicants -- particularly firms that are part of large or complex corporate organizations.
Applicants must establish a user account and then complete Form MA-T using the SEC’s public Web site (www.sec.gov/info/municipal/form_MA-T.htm). If information contained on Form MA-T becomes inaccurate, it must be amended promptly.
Information collected by the SEC pursuant to the temporary rule and on Form MA-T will not be confidential and will be made publicly available via the Internet.
Although the temporary rule goes into effect on October 1, 2010, the SEC is requesting comments on all aspects of the rule, including the general categories of municipal advisory activities included on Form MA-T, as well as the scope of disciplinary history required. The comment period will end 30 days after the temporary rule’s date of publication in the Federal Register (which is expected to occur during the week of September 5, 2010).