SEC Pushes Back Registration Date
By Cyril Tuohy
Municipal advisors have until July 1 to register with the Securities and Exchange Commission (SEC). That extends the registration deadline about seven months from Jan. 13. The SEC said that it wanted advisors to have extra time to “analyze, implement and comply with the final rules.”
The extension will also give the agency an opportunity to implement “non-substantive” amendments to record-keeping requirements around the new registration regime.
Final municipal registration rules were approved last year under the Dodd-Frank Wall Street Reform and Consumer Protection Act to track who is eligible to be a municipal advisor, and under what conditions an advisor may serve.
The rules require municipal advisors to register with the SEC if they provide advice to municipal entities or certain other persons on the issuance of municipal securities, or about certain investment strategies or municipal derivatives.
Compared to the U.S. Treasury market, which is liquid and transparent, the municipal bond market is more opaque and less regulated. Lawmakers called for stricter policing of advisors in the wake of the financial crisis of 2008 when many publicly funded capital projects were either delayed or scrapped altogether.
Last year, the SEC took action against the Greater Wenatchee Regional Events Center Public Facilities District in Wenatchee, Wash., for “sloppy, negligent” conduct related to a bond issue that was used to pay for the construction of a community center.
Allison Williams, the director of executive services for the City of Wenatchee who was “on loan” from the city to the regional improvement district at the request of her boss and former mayor, found herself in a position to sign off on financial documents.
In addition to delaying the date by which the first batch of municipal advisors will have to register, the SEC’s Office of Municipal Securities has issued guidance in the form of frequently-asked question (FAQs) to help advisors and advisory firms looking to do business with municipal bodies.
Among the answers covered by the FAQs are who is excluded or exempt from the new registration guidelines, the kind of advice they can give after municipal securities have been issued, the remarking of agent services, the extent of disclosure filings and what to do in the face of opinions by citizens in public forums.
Final rules for the registration of municipal advisors were adopted in September. More than 1,100 municipal advisors are registered with the SEC under a temporary registration program, the SEC also said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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