The Securities and Exchange Commission (the “SEC”) has adopted an interim final temporary rule, Rule 15Ba2-6T under the Securities Exchange Act of 1934, that establishes a means for municipal advisors to register with the SEC by October 1, 2010, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The temporary rule is effective through December 31, 2011, and the SEC expects to adopt a final rule establishing the permanent procedures for registration later this year.
WHO MUST REGISTER?
All municipal advisors must register with the SEC. A “municipal advisor” is any person (other than a municipal entity or an employee of a municipal entity) who (1) 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 (2) undertakes the solicitation of a municipal entity. Municipal advisors include financial advisors, guaranteed investment contract brokers, third party marketers, placement agents, solicitors, finders, and swap advisors.
For the purposes of registration, the term municipal advisor excludes:
- brokers, dealers, or municipal securities dealers serving as underwriters;
- attorneys offering traditional legal advice;
- engineers providing engineering advice;
- investment advisers registered under the Investment Advisers Act of 1940 (the “Advisers Act”) providing investment advice; and
- commodity trading advisors registered under the Commodity Exchange Act providing advice relating to swaps.
With respect to the first exclusion, brokers, dealers or municipal securities dealers are only exempt from registration when they are providing municipal advisory services while acting in the capacity as underwriter. If they are providing municipal advisory services while acting in a capacity other than as underwriter, they are required to register.
The exclusion for investment advisers registered under the Advisers Act is interpreted by the SEC to mean that a registered investment adviser or an associated person of a registered investment adviser is excluded from the definition of “municipal advisor” if they provide municipal advisory services, so long as those services qualify as “investment advice” for purposes of the Advisers Act. However, a registered investment adviser, or an associated person of a registered investment adviser, must register with the SEC as a municipal advisor if they provide any municipal advisory services other than investment advice within the meaning of the Advisers Act.
REGISTRATION REQUIREMENTS AND PROCEDURES
The temporary rule requires municipal advisors to access, complete, and submit a temporary registration form by October 1, 2010. The new registration form, Form MA-T, is available on the SEC’s website at http://www.sec.gov/ info/municipal/form_ma-t.htm. The filing is not confidential and will be available to the public on the SEC’s website.
Form MA-T must include the following information:
- the purpose for which such advisor is submitting the form (i.e., initial temporary registration, amendment to temporary registration, or withdrawal from temporary registration);
- the municipal advisor’s basic indentifying information and contact information concerning its business;
- the nature of the municipal advisor’s municipal advisory activities chosen from a finite list of possible activities; and
- the disciplinary history of the municipal advisor and its associated municipal advisor professionals.
Once a municipal advisor receives confirmation from the SEC that its Form MA-T was filed, it will be temporarily registered until the earliest of the following dates: (i) the date that the municipal advisor’s registration is approved or disapproved by the SEC pursuant to a final rule adopted by the SEC; (ii) the date on which the municipal advisor’s temporary registration is rescinded by the SEC; or (iii) the expiration of the interim final temporary rule on December 31, 2011.
A municipal advisor must amend Form MA-T promptly if the information provided therein becomes inaccurate in any way. Failure to update Form MA-T as required could result in revocation of the municipal advisor’s temporary registration.
Instructions to complete Form MA-T and a glossary of relevant terms are available at http://www.sec.gov/info/ municipal/form_ma-t.htm.