Government Accounting News: Municipal Advisor Rules

August 21, 2014

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.


Highlights include:

• 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 /mun-advisors-faqs.shtml.



©2014 Thomson Reuters/Tax & Accounting