• SEC Proposes Permanent Rules for Registration of Municipal Advisors
  • February 7, 2011 | Authors: Richard L. Chen; David F. Freeman; Richard P. Swanson
  • Law Firms: Arnold & Porter LLP - New York Office ; Arnold & Porter LLP - Washington Office ; Arnold & Porter LLP - New York Office
  • On December 20, 2010, the US Securities and Exchange Commission (SEC or Commission) proposed rules (proposed rules) to provide a permanent registration regime for “municipal advisors” and to delineate the books and records required to be created and maintained by such municipal advisors. These proposed rules are designed to implement Section 975 of the Dodd- Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) which amended Section 15B of the Securities Exchange Act of 1934 (Exchange Act) to require municipal advisors to register with the SEC by October 1, 2010. In addition to the new registration requirement, the Dodd-Frank Act subjects municipal advisors to SEC reporting obligations, an obligation to create and maintain certain books and records specified by SEC rules, fiduciary duties and a duty to deal fairly with their municipal entity clients, and SEC examinations and administrative enforcement authority. The Dodd-Frank Act defines the term “municipal advisor” generally to mean a person(who is not a municipal entity or an employee of a municipal entity) that (a) 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, including advice with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues or (b) undertakes a solicitation of a municipal entity. The statutory definition includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and swap advisors, if such persons engage in the activities described above. www.arnoldporter.com