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SEC Approves Final Municipal Advisor Rule SEC Approves Final Municipal Advisor Rule

SEC Approves Final Municipal Advisor Rule

On Sept. 18, 2013, the SEC voted to adopt final rules establishing a permanent registration regime for municipal advisors. The rule implements provisions in the Dodd-Frank Wall Street Reform Act that require the SEC and Municipal Securities Rulemaking Board to regulate municipal advisors who advise state and local governments and other municipal entities on the issuance of securities and how to invest proceeds from the sales.

The SEC scaled back its final rule from previous proposals. The final rules apply to individuals who provide "advice" to a municipal entity regarding the issuance of municipal securities, including the structure, timing and terms of transactions. It also encompasses those who advise municipalities on entering into swaps and investing the proceeds of a security issuance. 

The rule excludes from "advice," among other things, the provision of general information that does not involve a recommendation regarding municipal financial products or the issuance of municipal securities. The term "investment strategy" was narrowed to apply only to the investment of proceeds from bond sales rather than to all public funds.

The final rule also clarifies and narrows its application. Public officials, board members and employees "acting within the scope of their official capacity" for municipal governments do not constitute "financial advisers" and are exempt from the rule. Specifically, Rule 15Ba1-1(d)(3)(ii) exempts from the definition of municipal advisor "any person serving as a member of a governing body, an advisory board, or a committee of, or acting in a similar official capacity with respect to, or as an official of, a municipal entity or obligated person to the extent that such person is acting within the scope of such person's official capacity." This change in the final rule responds to comments that were filed by many national organizations representing government pension plans that had taken the position that all trustees of state and local government retirement systems (whether elected or appointed) as members of a governing body of a plan, program, or pool of assets sponsored or established by the State, political subdivision, or municipal corporate instrumentality should be excluded from the definition of municipal advisor.

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For more information contact Matt FornshellRoss FultonPhil Whistler or any member of Ice Miller's Litigation Group.


This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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