In January 2014, the staff of the Office of Municipal Securities of the Securities Exchange Commission (SEC) provided interpretive guidance on the implementation of the final SEC rules that were issued in September 2013 defining municipal advisors and requiring municipal advisors to register with the SEC (Final Rules). The guidance is provided in a set of answers to frequently asked questions (FAQs) covering the following topics:
• The advice standard.
• Request for proposals and qualifications exemption.
• Independent registered municipal advisor exemption.
• Registered investment advisor exclusion.
• Underwriter exclusion.
• Issuance of municipal securities and post-issuance advice.
• Remarketing agent services.
• Opinions by citizens in public discourse.
• Effective date of the final rules and the compliance period for using the final registration forms.
• Discussing the parameters that allow for an exemption to the municipal advisor in the request for proposal or request for qualification process to allow for the solicitation of ideas from pre-screened or pre-qualified market participants.
• Clarifying that SEC-registered investment advisers providing advice on municipal derivatives in an investment portfolio for municipal entity clients or obligated persons do not need to register as municipal advisors.
• Describing how a broker-dealer demonstrates that it is serving as the underwriter on a particular issuance of municipal securities and clarifying that a broker-dealer may not switch from a role as a municipal advisor to underwriter on the same issuance of municipal securities.
• Clarifying that citizens providing comments and opinions in a public forum would not be required to register as a municipal advisor.
The Final Rules are temporarily stayed until July 1, 2014, to provide market participants with adequate, but limited, time to analyze, implement, and comply with the Final Rules. A phased-in compliance period based on issued temporary registration numbers begins on July 1, 2014, and concludes on September 30, 2014. Anyone becoming a municipal advisor on or after October 1, 2014, is required to register as a municipal advisor using the final registration forms under the Final Rules.
Practical Consideration: The FAQ is available at www.sec.gov/info/municipal /mun-advisors-faqs.shtml.