Permanent Rule Proposed to Require Municipal Advisers to Register with the SEC

December 20, 2010

The SEC proposed a rule creating a new process by which municipal advisers must register with the SEC.  The proposed rule is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  It will replace a temporary rule adopted by the SEC, which was adopted in September. The SEC adopted the earlier temporary rule on an interim basis because the Dodd-Frank Act required that these advisers register by October 1, 2010

Municipal advisers 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 advisers also solicit business from a state or local government for a third party. Subject to certain exemptions, the definition of municipal adviser under the Dodd-Frank Act includes financial advisers, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and certain swap advisers that provide municipal advisory services.

Under the proposed permanent registration regime, municipal advisers will 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.  The proposed rule will require:

  • A municipal advisory firm to submit a Form MA to register.
  • An individual municipal adviser to submit a Form MA-I to register.
  • A municipal advisory firm or individual municipal adviser to submit a Form MA-W to withdraw from registration.
  • A non-resident municipal adviser (and any non-resident general partner or managing agent of a municipal adviser to submit a Form MA-NR in order to appoint an agent for service of process.

The registration forms envisioned by the proposed rule will require municipal advisers to provide identifying and contact information, and to disclose the municipal advisory activities in which they engage.  Municipal advisers also will be required to provide disciplinary history information similar to the information that the SEC obtains from registered broker-dealers and investment advisers. Individual municipal advisers will be required to amend the form whenever any of the required information has become inaccurate in any way; and municipal advisers will be required to amend the form annually, and whenever identifying and contact information or disciplinary information has become inaccurate.

Please click here for the release proposing the rule.


Investment Advisers, Regulatory