Temporary Registration of Municipal Advisors, 54465-54491 [2010-22255]
Download as PDF
<![CDATA[
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
Text of Amendment
For the reasons set out in the
preamble, Title 17, Chapter II of the
Code of Federal Regulations is amended
as follows:
■
PART 200—ORGANIZATION;
CONDUCT AND ETHICS; AND
INFORMATION AND REQUESTS
1. The authority citation for part 200,
subpart A, continues to read in part as
follows:
■
Authority: 15 U.S.C. 77o, 77s, 77sss, 78d,
78d–1, 78d–2, 78w, 78ll(d), 78mm, 80a–37,
80b–11, and 7202, unless otherwise noted.
*
*
*
*
*
2. Section 200.30–4 is amended by
adding paragraph (a)(15) to read as
follows:
■
§ 200.30–4 Delegation of authority to
Director of Division of Enforcement.
*
*
*
*
*
(a) * * *
(15) With respect to debts arising from
actions to enforce the federal securities
laws, to terminate collection activity or
discharge debts, to accept offers to
compromise debts when the principal
amount of the debt is $5 million or less,
to reject offers to compromise debts, and
to accept or reject offers to enter into
payment plans.
*
*
*
*
*
By the Commission.
Dated: September 1, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010–22241 Filed 9–7–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 240 and 249
[Release No. 34–62824; File No. S7–19–10]
RIN 3235–AK69
Temporary Registration of Municipal
Advisors
Securities and Exchange
Commission.
ACTION: Interim final temporary rule;
Request for comments.
AGENCY:
The Commission is adopting
an interim final temporary rule that
establishes a means for municipal
advisors, as defined in the Dodd-Frank
Wall Street Reform and Consumer
Protection Act 1 (‘‘Dodd-Frank Act’’), to
satisfy temporarily the requirement that
mstockstill on DSKH9S0YB1PROD with RULES
SUMMARY:
1 See Dodd-Frank Wall Street Reform and
Consumer Protection Act, Pub. L. 111–203 (2010).
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
they register with the Commission by
October 1, 2010.
DATES: Effective Date: October 1, 2010
through December 31, 2011. Comments
should be received on or before October
8, 2010.
ADDRESSES: Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/interim-final-temp.shtml); or
• Send an e-mail to
rule-comments@sec.gov. Please include
File No. S7–19–10 on the subject line;
or
• Use the Federal eRulemaking Portal
(https://www.regulations.gov). Follow the
instructions for submitting comments.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
S7–19–10. This file number should be
included on the subject line if e-mail is
used. To help us process and review
your comments more efficiently, please
use only one method. The Commission
will post all comments on the
Commission’s Internet Web site (https://
www.sec.gov/rules/
interim-final-temp.shtml). Comments
are also available for Web site viewing
and printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549 on official
business days between the hours of
10 a.m. and 3 p.m. All comments
received will be posted without change;
we do not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT:
Martha Mahan Haines, Assistant
Director and Chief, Office of Municipal
Securities, at (202) 551–5681; Ira L.
Brandriss, Special Counsel, Office of
Market Supervision, at (202) 551–5651;
Steve L. Kuan, Special Counsel, Office
of Market Supervision, at (202) 551–
5624; Rahman J. Harrison, Special
Counsel, Office of Market Supervision,
at (202) 551–5663; Steven Varholik,
Special Counsel, Office of Market
Supervision, at (202) 551–5615; Leigh
W. Duffy, Attorney-Adviser, Office of
Market Supervision, at (202) 551–2938;
or any of the above at Division of
Trading and Markets, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–6628.
PO 00000
Frm 00005
Fmt 4700
Sfmt 4700
54465
The
Commission is adopting new Rule
15Ba2–6T 2 under the Securities
Exchange Act of 1934 3 (the ‘‘Exchange
Act’’) as an interim final temporary rule.
The rule will expire at 11:59 p.m.
Eastern Time on December 31, 2011.
The Commission is soliciting comments
on all aspects of the interim final
temporary rule. The Commission will
carefully consider any comments
received and intends to respond as
necessary or appropriate. The
Commission expects to consider a
proposal for a final permanent
registration program, including detailed
requirements for the registration of
municipal advisors, and to seek public
comment on the proposal before its
adoption. Persons interested in
commenting on the final permanent
municipal advisor registration program
should submit comments to the
subsequent proposal.
SUPPLEMENTARY INFORMATION:
I. Introduction
As part of the Dodd-Frank Act, signed
into law by President Obama on July 21,
2010, Congress amended Section 15B(a)
of the Exchange Act 4 to, among other
things, make it unlawful for municipal
advisors, as defined below,5 to provide
certain advice or solicit municipal
entities or certain other persons without
registering with the Commission.6 The
registration requirement for municipal
advisors becomes effective on October 1,
2010, meaning that municipal advisors
must be registered on that date in order
to continue their municipal advisory
services.7
The Commission is today adopting,
on an interim final temporary basis, new
Rule 15Ba2–6T 8 under the Exchange
Act, which will permit municipal
advisors to temporarily satisfy the
registration requirement. The adoption
of Rule 15Ba2–6T serves as a
transitional step to the implementation
of a final permanent registration
program, makes relevant information
available to the public and municipal
entities, and permits municipal advisors
to continue their business after October
1, 2010. A municipal advisor may
temporarily satisfy the statutory
registration requirement by submitting
certain information electronically
through the Commission’s public Web
2 17
CFR 240.15Ba2–6T.
U.S.C. 78a et seq.
4 15 U.S.C. 78o–4(a). All references in this Release
to the Exchange Act refer to the Exchange Act as
amended by the Dodd-Frank Act.
5 See infra Section II.A.
6 See Section 975(a)(1)(B) of the Dodd-Frank Act;
15 U.S.C. 78o–4(a)(1)(B).
7 See Section 975(i) of the Dodd-Frank Act.
8 17 CFR 240.15Ba2–6T.
3 15
E:\FR\FM\08SER1.SGM
08SER1
54466
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
site on new Form MA–T, which is
designed for this purpose.9
Because entry of information into
Form MA–T will require establishing an
account and securing access credentials
(username and password) as explained
in more detail below, municipal
advisors are advised to allow ample
time to establish an account and obtain
such credentials and complete the form
before October 1, 2010.10 The form and
instructions for requesting access
credentials will be accessible through a
link located on the Commission’s Web
site, https://www.sec.gov, beginning on
or about September 1, 2010.
II. Discussion
mstockstill on DSKH9S0YB1PROD with RULES
Section 15B(a)(1) of the Exchange Act,
as amended by Section 975(a)(1)(B) of
the Dodd-Frank Act, makes it unlawful
for a municipal advisor to provide
advice to or on behalf of a municipal
entity or obligated person with respect
to municipal financial products or the
issuance of municipal securities, or to
undertake a solicitation of a municipal
entity or obligated person, unless the
municipal advisor is registered with the
Commission.11 Section 15B(a)(2) of the
Exchange Act, as amended by Section
975(a)(2) of the Dodd-Frank Act,
provides that a municipal advisor may
be registered by filing with the
Commission an application for
registration in such form and containing
such information and documents
concerning the municipal advisor and
any person associated with the
municipal advisor as the Commission,
by rule, may prescribe as necessary or
appropriate in the public interest or for
the protection of investors.
9 17 CFR 249.1300T. A municipal advisor that
completes the temporary registration form and
receives confirmation from the Commission that the
form was filed will be temporarily registered for
purposes of Section 15B. See also infra notes 47–
48 and accompanying text.
10 In order to establish an account and obtain
access credentials with the temporary registration
system for Form MA–T on the Commission’s secure
Web site, a submitter will need to fill out general
user information fields such as name, address,
phone number, e-mail address, organization name
and employer identification number, and user
account information (i.e., username and password),
and to select and answer a security question. Once
accepted by the temporary registration system, the
submitter will receive an e-mail notification that the
account has been established and the submitter will
be able to access and complete Form MA–T. The
Commission staff anticipates that submitters will
ordinarily obtain access credentials the same day
that they are requested. However, to avoid the
possibility of delay, all municipal advisors are
encouraged to allow ample time to establish an
account and obtain access credentials and complete
Form MA–T by October 1, 2010.
11 For definitions of the terms ‘‘municipal entity,’’
‘‘obligated person,’’ ‘‘municipal financial product,’’
and ‘‘solicitation of a municipal entity or obligated
person,’’ see infra, notes 13–17.
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
The Commission is adopting an
interim final temporary rule, Rule
15Ba2–6T, in order to provide a method
for municipal advisors to temporarily
satisfy the statutory registration
requirement of Section 15B(a)(1) of the
Exchange Act (as amended by Section
975(a)(1) of the Dodd-Frank Act) until
the Commission has promulgated a final
permanent registration program. The
interim final temporary rule will expire
on December 31, 2011.
As described in detail below, Form
MA–T will require a municipal advisor
to indicate the purpose for which it is
submitting the form (i.e., initial
application for, or amendment or
withdrawal of temporary registration),
provide certain basic identifying and
contact information concerning its
business, indicate the nature of its
municipal advisory activities, and
supply information about its
disciplinary history and the disciplinary
history of its associated municipal
advisor professionals. The Commission
carefully considered alternatives to the
adoption of an interim final temporary
rule before deciding to adopt Rule
15Ba2–6T. It considered, for example,
whether it would be preferable to issue
a broad-based exemption from the
Dodd-Frank Act’s registration
requirement 12 in order to allow the
Commission time to consider a final
permanent registration program before
municipal advisors would be required
to submit any registration form. In light
of the October 1, 2010 effective date that
Congress set for Section 975 of the
Dodd-Frank Act, delaying
implementation of any registration for
municipal advisors and not
accommodating temporary registration
would not appear to achieve the
purposes intended by Congress in
selecting an October 1, 2010 registration
date.
The Commission also considered and
weighed the relative costs and benefits
of requiring disciplinary information in
the context of the temporary registration
contemplated by Form MA–T. The
Commission has determined to require
disclosure of disciplinary information
on Form MA–T because of the value it
will have for the Commission’s
oversight of municipal advisors and
their activities in the municipal
securities market, and because of the
importance of such disciplinary
information to investors, issuers and
others in choosing a municipal advisor,
engaging in transactions with a
municipal advisor, or participating in
12 See Section 15B(a)(4) of the Exchange Act, as
amended by Section 975(a)(4) of the Dodd-Frank
Act.
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
transactions in municipal securities
issued in offerings for which a
municipal advisor provided municipal
advisory services.
The Commission believes that
providing a temporary registration
process for municipal advisors,
pursuant to an interim final temporary
rule effective on October 1, 2010, is a
necessary and appropriate way to
proceed, is consistent with the intent of
Congress in enacting Section 975, and is
a tailored way to provide investors and
municipal entities with basic and
important information quickly while the
Commission considers a permanent
registration program. The Commission
requests comment generally on the
decision to require temporary
registration on Form MA–T and the
specific information required to be
reported on the form. The Commission
also requests comment on the
Commission’s determinations discussed
above and on whether there are
alternatives not discussed above that the
Commission should consider.
A. Definition of Municipal Advisor
Section 15B(e) of the Exchange Act, as
amended by Section 975(e) of the DoddFrank Act, defines the term ‘‘municipal
advisor’’ to mean a person (who is not
a municipal entity or an employee of a
municipal entity) (1) that provides
advice to or on behalf of a municipal
entity 13 or obligated person 14 with
respect to municipal financial
products 15 or the issuance of municipal
securities,16 including advice with
13 ‘‘Municipal entity’’ is defined to mean any
State, political subdivision of a State, or municipal
corporate instrumentality of a State, including: Any
agency, authority, or instrumentality of the State,
political subdivision, or municipal corporate
instrumentality; any plan, program, or pool of assets
sponsored or established by the State, political
subdivision, or municipal corporate instrumentality
or any agency, authority, or instrumentality thereof;
and any other issuer of municipal securities. See
Section 15B(e) of the Exchange Act, as amended by
Section 975(e) of the Dodd-Frank Act.
14 ‘‘Obligated person’’ is defined to mean any
person, including an issuer of municipal securities,
who is either generally or through an enterprise,
fund, or account of such person, committed by
contract or other arrangement to support the
payment of all or part of the obligations on the
municipal securities to be sold in an offering of
municipal securities. See id.
15 ‘‘Municipal financial product’’ is defined to
mean municipal derivatives, guaranteed investment
contracts, and investment strategies. ‘‘Investment
strategies’’ includes plans or programs for the
investment of the proceeds of municipal securities
that are not municipal derivatives, guaranteed
investment contracts, and the recommendation of
and brokerage of municipal escrow investments.
See id.
16 The statute specifically includes within the
meaning of municipal advisor, someone who
provides advice with respect to the structure,
timing, terms, and other similar matters concerning
municipal financial products or issues. See id.
E:\FR\FM\08SER1.SGM
08SER1
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
mstockstill on DSKH9S0YB1PROD with RULES
respect to the structure, timing, terms,
and other similar matters concerning
such financial products or issues, or (2)
that undertakes a solicitation 17 of a
municipal entity. The definition
specifically includes ‘‘financial advisors,
guaranteed investment contract brokers,
third-party marketers, placement agents,
solicitors, finders, and swap advisors’’
that provide municipal advisory
services.18 The definition of ‘‘municipal
advisor’’ explicitly excludes a broker,
dealer, or municipal securities dealer
serving as an underwriter,19 as well as
attorneys offering legal advice or
providing services that are of a
traditional legal nature and engineers
providing engineering advice are also
excluded.20
The Dodd-Frank Act also excludes
from the definition ‘‘any investment
adviser registered under the Investment
Advisers Act of 1940, or persons
associated with such investment
advisers who are providing investment
advice.’’ 21 The Commission interprets
this exclusion 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 the investment
adviser or associated person of the
adviser provides municipal advisory
services, so long as those services are
17 ‘‘Solicitation of a municipal entity or obligated
person’’ is defined to mean a direct or indirect
communication with a municipal entity or
obligated person made by a person, for direct or
indirect compensation, on behalf of a broker, dealer,
municipal securities dealer, municipal advisor, or
investment adviser (as defined in Section 202 of the
Investment Advisers Act of 1940, 15 U.S.C. 80b–2)
that does not control, is not controlled by, or is not
under common control with the person undertaking
such solicitation for the purpose of obtaining or
retaining an engagement by a municipal entity or
obligated person of a broker, dealer, municipal
securities dealer, or municipal advisor for or in
connection with municipal financial products, the
issuance of municipal securities, or of an
investment adviser to provide investment advisory
services to or on behalf of a municipal entity. See
id.
18 These entities, however, are only included if
they provide 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
undertake a solicitation of a municipal entity. See
Section 975(e) of the Dodd-Frank Act. The term
‘‘municipal advisory services’’ as used herein means
advice with respect to municipal financial
products, the issuance of municipal securities, and
the solicitation of a municipal entity.
19 The term ‘‘underwriter’’ is defined in Section
2(a)(11) of the Securities Act of 1933. 15 U.S.C.
77b(a)(11). A broker, dealer or municipal securities
dealer who provides municipal advisory services
while acting in a capacity other than as an
underwriter would, however, be a municipal
advisor.
20 Id.
21 See Section 975(e) of the Dodd-Frank Act.
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
investment advice for purposes of the
Investment Advisers Act. A registered
investment adviser or an associated
person of a registered investment
adviser must register with the
Commission as a municipal advisor if
the adviser or associated person of an
adviser provides any municipal
advisory services other than investment
advice within the meaning of the
Investment Advisers Act.22
The Commission similarly interprets
the exclusion in the Dodd-Frank Act of
‘‘any commodity trading advisor
registered under the Commodity
Exchange Act or persons associated
with a commodity trading advisor who
are providing advice related to swaps.’’
Accordingly, a commodity trading
advisor or any person associated with a
commodity trading advisor is excluded
from the definition of ‘‘municipal
advisor’’ if the commodity trading
advisor or associated person of the
commodity trading advisor provides
municipal advisory services, so long as
those services are advice related to
swaps. A commodity trading advisor or
an associated person of a commodity
trading advisor must register with the
Commission as a municipal advisor if
the commodity trading advisor or an
associated person of a commodity
trading advisor provides any municipal
advisory services that are not advice
related to swaps.
B. Temporary Registration on Form
MA–T
Pursuant to new Rule 15Ba2–6T, as of
October 1, 2010, in order temporarily to
satisfy the new registration requirement
for municipal advisors, and thereby
legally be permitted to perform, or
continue to perform, municipal advisory
services, a municipal advisor will need
to have completed and submitted new
Form MA–T through the Commission’s
Web site at https://www.sec.gov by
October 1, 2010. Because entry of
information into Form MA–T will
require the securing of access
credentials, as explained in more detail
below, municipal advisors are advised
to allow ample time to establish an
account and obtain access credentials
(username and password) and complete
the form by October 1, 2010. Form MA–
T will require a municipal advisor to
indicate the purpose for which it is
submitting the form (i.e., initial
temporary registration, amendment to
temporary registration, or withdrawal
from temporary registration), provide
22 The Commission believes that such
interpretation is in furtherance of the goals of the
Dodd-Frank Act to regulate municipal advisors, a
category of persons previously unregulated.
PO 00000
Frm 00007
Fmt 4700
Sfmt 4700
54467
certain basic identifying and contact
information concerning its business,
indicate the nature of its municipal
advisory activities, and supply
information about its disciplinary
history and the disciplinary history of
its associated municipal advisor
professionals.23
More specifically, the information to
be supplied will include:
Basic Information
1. Purpose for submission of Form
MA–T. A municipal advisor must
indicate whether it is submitting the
form for initial temporary registration as
a municipal advisor, is submitting an
amendment to a temporary registration
as a municipal advisor, or is submitting
a withdrawal from temporary
registration as a municipal advisor. If
the municipal advisor is submitting an
amendment or withdrawing from
temporary registration, it will also be
necessary to provide the Municipal
Advisor Registration Number assigned
to the municipal advisor at the time of
its initial temporary registration. This
information is needed in order to
determine the purpose for which Form
MA–T is being submitted and to
appropriately cross-reference
amendments and withdrawals to the
original temporary registration. The
inclusion of these items will allow the
same form, Form MA–T, to be used for
multiple purposes: Initial temporary
registration, amendments to temporary
registrations and withdrawals from
temporary registration.
The Commission seeks comment on
the use of Form MA–T for these three
purposes, whether use of the same form
for multiple purposes may be confusing
for registrants, and whether it would be
preferable to have a separate form for
each of these purposes. Will these
requirements be confusing or otherwise
difficult for a municipal advisor to
comply with?
2. Identifying and contact
information. A municipal advisor must
indicate the full legal name of the
municipal advisor and, if different, the
name under which it conducts its
business, the address of its principal
office and place of business, the
telephone number and the facsimile
number, if any, at that location, and its
23 Every temporary registration and each
amendment to a temporary registration or
withdrawal from temporary registration filed
pursuant to the rule shall constitute a ‘‘report’’
within the meaning of Sections 15B(c), 17(a), 18(a)
and 32(a) and other applicable provisions of the
Exchange Act. See Rule 15Ba2–6T(c). As a
consequence, it would be unlawful for a municipal
advisor to willfully make or cause to be made, a
false or misleading statement of a material fact or
omit to State a material fact in the Form MA–T.
E:\FR\FM\08SER1.SGM
08SER1
mstockstill on DSKH9S0YB1PROD with RULES
54468
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
general e-mail address and Web site, if
any. In addition, the municipal advisor
must supply its mailing address, if it is
different from its principal office and
place of business, as well as the name
and title of a person whom the
municipal advisor has authorized to
receive information and respond to
questions about the registration (the
‘‘contact person’’) and the address,
telephone number and facsimile
number, if any, and e-mail address, if
any, of the contact person.
The Commission is requesting this
identifying and contact information to
determine whether a particular
municipal advisor has submitted a
temporary registration, to contact a
person at the municipal advisor if
Commission staff have any questions or
wish to arrange for an inspection, and
to send information to the municipal
advisor.
The Commission requests comment
concerning the appropriateness of
requiring this identifying and contact
information, including whether
additional information should be
required or whether different
information would be better suited for
this purpose. In particular, might it be
confusing or otherwise difficult for a
municipal advisor to supply this
information?
3. Other regulatory identifying
information. Form MA–T also requires a
municipal advisor to provide its
Employer Identification Number (used
with respect to Internal Revenue Service
matters), but not—in the case of a sole
proprietor, for example—a Social
Security Number. If the municipal
advisor is also registered with the
Commission as an investment adviser,
broker, dealer, or municipal securities
dealer, it will be required to provide its
related SEC file number or numbers. In
addition, if the municipal advisor has a
number (a ‘‘CRD Number’’) assigned to it
either under the Financial Industry
Regulatory Authority’s (‘‘FINRA’’)
Central Registration Depositary (‘‘CRD’’)
system or the Investment Adviser
Registration Depository (‘‘IARD’’)
system, it will be required to provide its
CRD Number.
The Commission seeks this
information to more effectively crossreference those entities registered as
municipal advisors to those who are
registered as brokers, dealers, municipal
securities dealers or investment
advisers. This ability to cross-reference
will allow the Commission to assemble
more complete information concerning
a municipal advisor who is also
registered as a broker, dealer, municipal
securities dealer or investment adviser
and to plan for and carry out efficient
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
and effective examinations of such
entities.24 In addition, by obtaining all
of a registrant’s regulatory file numbers,
the Commission will be able to crossreference disciplinary information that
is submitted to the CRD or IARD
systems with that submitted on Form
MA–T.
The Commission seeks comment
concerning the requirement to supply
SEC file numbers and CRD Numbers.
Will this requirement be confusing or
otherwise difficult for a municipal
advisor to comply with? Would the use
of other identifying numbers be more
useful or appropriate or should no
identifying numbers be required?
Nature of Municipal Advisory Activities
Form MA–T requires the municipal
advisor to indicate the general types of
municipal advisory services that it
provides. The following eight activities
are listed, together with a checkbox for
each: (1) Advice concerning the
issuance of municipal securities, (2)
advice concerning the investment of the
proceeds of municipal securities, (3)
advice concerning guaranteed
investment contracts, (4)
recommendation and/or brokerage of
municipal escrow investments, (5)
advice concerning the use of municipal
derivatives (e.g., swaps), (6) solicitation
of business from a municipal entity or
obligated person for an unaffiliated
person or firm (e.g., third party
marketers, placement agents, solicitors
and finders), (7) preparation of
feasibility studies, tax or revenue
projections, or similar products in
connection with offerings or potential
offerings of municipal securities, and (8)
other. Registrants who check ‘‘other’’
activities will be required to provide a
narrative description of such activities.
Activities one to six above are derived
from the definition of municipal advisor
in the Dodd-Frank Act.25 Activity
number seven above (the preparation of
feasibility studies, tax or revenue
projections, or similar products in
connection with offerings or potential
offerings of municipal securities) was
included because these services are
sometimes provided by financial
advisors (some of whom may be
municipal advisors) to municipal
entities. This information, together with
information under item eight (other),
will assist the Commission in
understanding the scope of activities in
which a municipal advisor engages.
The Commission is seeking this
information in order to better
24 See
15 U.S.C. 78o–4(c)(7).
Section 15B(e)(4) of the Exchange Act as
added by Section 975(e)(4) of the Dodd-Frank Act.
25 See
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
understand the activities of municipal
advisors. This information is necessary
to understand the basis for registration
and will assist Commission staff to
better plan and prepare for inspections
and examinations 26 of municipal
advisors.
The Commission seeks comment
concerning the requirement for a
municipal advisor to supply
information in Form MA–T concerning
the general types of municipal advisory
services it provides. In particular, will it
be confusing or otherwise difficult for a
municipal advisor to provide this
information? Are the categories of
municipal advisory services appropriate
or should additional or other categories
be included? Are there considerations
relating to the business of municipal
advisors, or of some types of municipal
advisors, that the Commission may not
have taken into account in connection
with this list of municipal advisory
services?
Disciplinary Matters
Section 975 of the Dodd-Frank Act
amended section 15B of the Exchange
Act to direct the Commission, by order,
to censure, place limitations on the
activities, functions, or operations,
suspend for a period not exceeding
twelve months, or revoke the
registration of any municipal advisor, if
it finds 27 that such municipal advisor
has committed or omitted any act, or is
subject to an order or finding,
enumerated in subparagraph (A),28
(D),29 (E),30 (H),31 or (G) 32 of paragraph
(4) of section 15(b) of the Exchange Act;
has been convicted of any offense
specified Section 15(b)(4)(B) 33 of the
Exchange Act within ten years of the
commencement of the proceedings
under section 15(c); or is enjoined from
any action, conduct, or practice
specified in Section 15(b)(4)(C) 34 of the
Exchange Act.35 Item 3 of Form MA–T
includes questions intended to solicit
information from a municipal advisor
concerning any of its activities or
26 See Section 17(a)(1) of the Exchange Act, as
amended by Section 975(h) of the Dodd-Frank Act.
27 Such findings must be on the record after
notice and opportunity for hearing and include a
finding that the particular disciplinary action is in
the public interest. See Section 15B(c)(2) of the
Exchange Act, as amended by Section 975(c)(3) of
the Dodd-Frank Act. See also 17 CFR 201.
28 See 15 U.S.C. 78o(b)(4)(A).
29 See 15 U.S.C. 78o(b)(4)(D).
30 See 15 U.S.C. 78o(b)(4)(E).
31 See 15 U.S.C. 78o(b)(4)(H).
32 See 15 U.S.C. 78o(b)(4)(G).
33 See 15 U.S.C. 78o(b)(4)(B).
34 See 15 U.S.C. 78o(b)(4)(C).
35 The Commission has the same authority with
respect to municipal securities dealers. See 15
U.S.C. 78o–4(c).
E:\FR\FM\08SER1.SGM
08SER1
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
activities of certain of its associated
persons that could subject the
municipal advisor to disciplinary
actions by the Commission under such
subparagraphs of Section 15(b)(4) of the
Exchange Act.
In addition to its value generally for
the Commission’s oversight of the
municipal securities markets, the
Commission seeks this information
because it may indicate that a municipal
advisor could be statutorily disqualified
from acting as a municipal advisor.36 In
addition, the Commission wishes to
make this important information
available to municipal entities and
obligated persons who engage
municipal advisors and to investors
who may purchase securities from
offerings in which municipal advisors
participated.
The disciplinary information to be
disclosed is substantially similar to the
information required to be disclosed in
Form BD for broker-dealers.37
Specifically, Form MA–T asks questions
concerning the disciplinary history of
the municipal advisor and of its
associated municipal advisor
professionals. The Commission defines
the term ‘‘associated municipal advisor
professional’’ in the glossary section of
Form MA–T to mean: (A) Any
associated person of a municipal
advisor primarily engaged in municipal
advisory activities; (B) any associated
person of a municipal advisor who is
engaged in the solicitation of municipal
entities or obligated persons; (C) any
associated person who is a supervisor of
any persons described in subparagraphs
(A) or (B); (D) any associated person
who is a supervisor of any person
described in subparagraph (C) up
through and including, the Chief
Executive Officer or similarly situated
official designated as responsible for the
day-to-day conduct of the municipal
advisor’s municipal advisory activities;
and (E) any associated person who is a
member of the executive or management
committee of the municipal advisor or
a similarly situated official, if any; and
excludes any associated person whose
functions are solely clerical or
ministerial. The definition of associated
municipal finance professional is
derived from the definition of
‘‘municipal finance professional’’ set
forth in Rule G–37 of the Municipal
Securities Rulemaking Board.
The Commission has chosen to limit
this inquiry to a subgroup (associated
municipal advisor professionals) for
purposes of temporary registration in
order to obtain information about those
36 See
37 17
id.
CFR 249.501.
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
associated persons 38 who are closely
associated with an advisor’s municipal
advisory activities, i.e., those who are
primarily engaged in an advisor’s
municipal advisory activities, have
supervisory responsibilities over those
primarily engaged in municipal
advisory activities, are engaged in dayto-day management of the conduct of an
advisor’s municipal advisory activities,
or are responsible for executive
management of the advisor. The
Commission believes this is an
appropriate definition to use for
purposes of temporary registration
because it will allow the Commission to
obtain, and municipal entities, obligated
persons and investors to have access to,
information about those persons who
may be most relevant to an advisor’s
municipal advisory services, while
excluding information about persons at
a firm whose activities may have less
bearing on the provision of such
services.
The Commission seeks comment
concerning whether this limitation is
appropriate, whether it excludes
persons whose disciplinary history may
be relevant to a municipal advisor’s
activities, or whether it includes
persons whose disciplinary history is
not sufficiently relevant to a municipal
advisor’s activities to warrant
disclosure. In addition, the Commission
solicits specific suggestions as to how
the disclosure regarding associated
persons whose actions are covered by
Item 3 of Form MA–T might be
improved for purposes of a permanent
registration program or whether the
current limitation to associated
municipal advisory professionals is
suitable.
In addition, the Commission notes
that the time-period limits for disclosure
on Form MA–T are consistent with the
disclosure reporting requirements on
Form BD, adopted pursuant to Section
15(b)(4) of the Exchange Act.
Specifically, with respect to felonies
and misdemeanors involving
investments or an investment-related
business, Form MA–T requires
disclosures of matters within the last ten
38 Section 15B(e)(7) of the Exchange Act, added
by Section 975(e) of the Dodd-Frank Act, defines
‘‘associated person of a municipal advisor’’ as any
partner, officer, director, or branch manager of a
municipal advisor (or any person occupying a
similar status or performing similar functions); any
other employee of a municipal advisor who is
engaged in the management, direction, supervision,
or performance of any activities relating to the
provision of advice to or on behalf of a municipal
entity or obligated person with respect to municipal
financial products or the issuance of municipal
securities; and any person directly or indirectly
controlling, controlled by, or under common
control with a municipal advisor, or an employee
of a municipal advisor.
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
54469
years. With respect to whether the
municipal advisor or any associated
municipal advisor professional was
enjoined by any domestic or foreign
court in connection with any
investment-related activity, Form MA–T
similarly requires disclosures of matters
within the last ten years. Disclosure is
also required concerning any orders
entered against the municipal advisor or
any associated municipal advisor
professional by any Federal or State
regulatory agency other than the SEC
and Commodity Futures Trading
Commission (‘‘CFTC’’) 39 or by any
foreign financial regulatory authority
within the last ten years.
With respect to all other matters
identified on Form MA–T (including
Federal, State, and foreign regulatory
actions and actions taken by selfregulatory organizations), no time limit
is placed on disclosure. The
Commission believes that it is important
to collect information about matters
within these timeframes because, under
the Exchange Act, the Commission
could use such matters to form the basis
for an action to suspend or revoke a
municipal advisor’s registration.40
The Commission seeks comment
concerning these timeframes in
connection with temporary registration
of municipal advisors. Would the public
and municipal entities find the full
history of disciplinary information
important and useful? Are these
timeframes too long, such that they
require disclosure of information that is
no longer useful, or such that they
impose an undue burden on applicants
for temporary registration?
More specifically, Form MA–T asks
the following, which are, in substance,
the same as the disciplinary questions
asked in Form BD:
1. Whether, in the past ten years, the
municipal advisor or any associated
municipal advisor professional has been
convicted of or pled guilty or nolo
contendere (‘‘no contest’’) in a domestic,
foreign, or military court to any felony
or been charged 41 with any felony?
2. Whether in the past ten years, the
municipal advisor or any associated
municipal advisor professional has been
convicted of or pled guilty or nolo
contendere (‘‘no contest’’) in a domestic,
foreign, or military court to a
misdemeanor involving: Investments or
an investment-related business, or any
fraud, false statements, or omissions,
39 With regard to the orders entered by SEC and
CFTC, no time limit is placed on disclosure. See
infra Item 3(d).
40 See Section 15B(c)(2) of the Exchange Act.
41 The Commission notes that a municipal advisor
only needs to report charges that are currently
pending.
E:\FR\FM\08SER1.SGM
08SER1
mstockstill on DSKH9S0YB1PROD with RULES
54470
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
wrongful taking of property, bribery,
perjury, forgery, counterfeiting,
extortion, or a conspiracy to commit any
of these offenses or has been charged 42
with a misdemeanor involving such
actions?
3. Whether the SEC or the CFTC has
ever: (a) Found the municipal advisor or
any associated municipal advisor
professional to have made a false
statement or omission, (b) found the
municipal advisor or any associated
municipal advisor professional to have
been involved in a violation of its
regulations or statutes, (c) found the
municipal advisor or any associated
municipal advisor professional to have
been a cause of an investment-related
business having its authorization to do
business denied, suspended, revoked, or
restricted, (d) entered an order against
the municipal advisor or any associated
municipal advisor professional in
connection with investment-related
activity, or (e) imposed a civil money
penalty on the municipal advisor or any
associated municipal advisor
professional, or ordered the municipal
advisor or any associated municipal
advisor professional to cease and desist
from any activity.
4. Whether any other Federal
regulatory agency, any State regulatory
agency, or any foreign financial
regulatory authority has (a) Ever found
the municipal advisor or any associated
municipal advisor professional to have
made a false statement or omission, or
been dishonest, unfair, or unethical, (b)
ever found the municipal advisor or any
associated municipal advisor
professional to have been involved in a
violation of investment-related
regulations or statutes, (c) ever found
the municipal advisor or any associated
municipal advisor professional to have
been a cause of an investment-related
business having its authorization to do
business denied, suspended, revoked, or
restricted, (d) in the past ten years,
entered an order against the municipal
advisor or any associated municipal
advisor professional in connection with
an investment-related activity, or (e)
ever denied, suspended, or revoked the
municipal advisor’s or any associated
municipal advisor professional’s
registration or license, or otherwise
prevented the municipal advisor or any
associated municipal advisor
professional, by order, from associating
with an investment-related business or
restricted the municipal advisor’s or any
associated municipal advisor
professional’s activity.
42 The Commission notes that a municipal advisor
only needs to report charges that are currently
pending.
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
5. Whether any self-regulatory
organization or commodities exchange
has ever (a) found the municipal advisor
or any associated municipal advisor
professional to have made a false
statement or omission, (b) found the
municipal advisor or any associated
municipal advisor professional to have
been involved in a violation of its rules
(other than a violation designated as a
‘‘minor rule violation’’ under a plan
approved by the SEC), (c) found the
municipal advisor or any associated
municipal advisor professional to have
been the cause of an investment-related
business having its authorization to do
business denied, suspended, revoked, or
restricted, or (d) disciplined the
municipal advisor or any associated
municipal advisor professional by
expelling or suspending it from
membership, barring or suspending its
association with other members, or
otherwise restricting its activities.
6. Whether the municipal advisor’s or
any associated municipal advisor
professional’s authorization to act as an
attorney, accountant, or Federal
contractor has ever been revoked or
suspended.
7. Whether the municipal advisor or
any associated municipal advisor
professional is now the subject of any
regulatory proceeding that could result
in a ‘‘yes’’ answer to any part of the
questions described in 3, 4 or 5 above.
8. Whether any domestic or foreign
court has: (a) In the last ten years,
enjoined the municipal advisor or any
associated municipal advisor
professional in connection with any
investment-related activity, (b) ever
found that the municipal advisor or any
associated municipal advisor
professional was involved in a violation
of investment-related statutes or
regulations, or (c) ever dismissed,
pursuant to a settlement agreement, an
investment-related civil action brought
against the municipal advisor or any
associated municipal advisor
professional by a State or foreign
financial regulatory authority?
9. Whether the municipal advisor or
any associated municipal advisor
professional is now the subject of any
civil proceeding that could result in a
‘‘yes’’ answer to any part of question 8
above.
If a municipal advisor answers ‘‘yes’’ to
any of these questions, a text box will
require a brief narrative of the event or
a cross-reference to disclosure of the
event made through the broker-dealer or
investment advisor public disclosure
systems.
The Commission requests comments
on all aspects of these disciplinary
PO 00000
Frm 00010
Fmt 4700
Sfmt 4700
questions, including their
appropriateness and adequacy, whether
there are additional or other questions
that should be included, and whether
they will impose an excessive burden
on municipal advisors to answer. In
addition, the Commission requests
comment concerning whether including
the disciplinary questions in Form
MA–T will impose undue hardship on,
or have other consequences for, small
municipal advisors. Furthermore,
comment is solicited as to whether the
ability to cross-reference to disciplinary
disclosures on Form BD and Form ADV
for investment advisers 43 will make it
more difficult for municipal entities,
obligated persons, investors and others
to obtain this information than if it were
included in Form MA–T itself. In
addition, will the ability of municipal
advisors to cross-reference such
disclosures on Forms BD and ADV
significantly reduce the burden on
municipal advisors, and particularly
small advisors, to complete Form
MA–T?
Execution
With respect to execution of Form
MA–T, the person who signs the form
will be required to depose and say that
he or she has executed the form on
behalf of the municipal advisor and
with its authority. With this execution,
both the person who signs the form and
the municipal advisor must represent
that the information and statements
made in Form MA–T are current, true
and complete. The municipal advisor
also will be required to consent to
service of any civil action or notice of
any proceeding before the Commission
or self-regulatory organization regarding
its advisory services via registered or
certified mail to its named contact
person. This is consistent with the
execution provisions of Forms BD and
ADV, but deletes references to State
registration, bonding requirements and
other inapplicable components.
The individual who signs the Form
MA–T depends upon the form of
organization of the municipal advisor:
• For a sole proprietorship, the sole
proprietor should sign.
• For a partnership, a general partner
should sign.
• For a corporation, an authorized
principal officer should sign.
• For all others, an authorized
individual who participates in
managing or directing the municipal
advisor’s affairs should sign.
The Commission requests comment
concerning the representations required
of a person who executes Form MA–T,
43 17
E:\FR\FM\08SER1.SGM
CFR 279.1.
08SER1
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
such as whether there should be
additional or alternative
representations. In addition, the
Commission solicits comment regarding
the requirement that the municipal
advisor submit to service of process in
the manner described. Would there be
alternative methods to obtain such
consent or should such consent not be
obtained?
Amendment, Withdrawal, and
Rescission
Rule 15Ba2–6T requires that a
municipal advisor promptly amend
Sections 1 or 3 of Form MA–T if the
information therein becomes inaccurate
in any way and whenever a municipal
advisor wishes to withdraw from
registration. A municipal advisor can
amend its Form MA–T on the
Commission’s Web site by accessing
Form MA–T and checking the box in
Item 1 for an amendment and providing
updated information in the relevant
sections of the form. Similarly, a
municipal advisor can withdraw its
registration by accessing Form MA–T on
the Commission’s Web site and by
checking the box for withdrawal on the
form. In addition, pursuant to Rule
15Ba2–6T, the Commission may rescind
a municipal advisors’ temporary
registration following notice and
hearing in accordance with the
Commission’s Rules of Practice.44
Instructions and Glossary
Form MA–T includes a set of
instructions for its proper completion
and submission, and a glossary of terms
intended, in part, to help participants in
the municipal securities industry in
determining whether they are municipal
advisors and thus required to register.
These instructions and glossary are
attached to this release, together with
Form MA–T. The definitions in the
glossary (except for the definition of
associated municipal advisor
professional discussed above 45) are
derived from Form ADV and the terms
in the Exchange Act, including Section
975(e) of the Dodd-Frank Act.46 The
44 See
supra note 23.
supra text accompanying notes 37–38.
46 The following definitions in the glossary were
taken from Form ADV (17 CFR 279.1): ‘‘Affiliate,’’
‘‘Charged,’’ ‘‘Control,’’ ‘‘Employee,’’ ‘‘Enjoined,’’
‘‘Felony,’’ ‘‘FINRA CRD or CRD,’’ ‘‘Foreign Financial
Regulatory Authority,’’ ‘‘Found,’’ ‘‘InvestmentRelated,’’ ‘‘Involved,’’ ‘‘Minor Rule Violation,’’
‘‘Misdemeanor,’’ ‘‘Order,’’ ‘‘Person,’’ ‘‘Principal Place
of Business or Principal Office and Place of
Business,’’ ‘‘Proceeding,’’ ‘‘Related Person,’’ and
‘‘Self-Regulatory Organization or SRO.’’ The
Commission believes that it is appropriate to
conform the definitions for these terms in Form
MA–T to the definitions used in Form ADV because
the information sought will be used for similar
purposes. In addition, inconsistency in the
mstockstill on DSKH9S0YB1PROD with RULES
45 See
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
instructions are intended to answer
basic questions concerning completion
of the form. Comments are requested on
all aspects of the form, instructions and
glossary. For example, comments are
solicited concerning whether the
definitions and instructions are clear
and useful to a submitter and how they
might be improved. In addition,
comments are solicited concerning
whether additional instructions or
definitions would be useful.
Timing Issues
As noted above, current municipal
advisors are required by statute to
register with the Commission by
October 1, 2010. Municipal advisors are
advised to allow ample time to establish
an account and obtain access credentials
(username and password) and complete
the on-line version of Form MA–T by
the statutory deadline.
In order to establish an account and
obtain access credentials to the
temporary registration system for filing
Form MA–T on the Commission’s
secure Web site, a submitter will need
to fill out general user information fields
such as name, address, phone number,
e-mail address, organization name and
employer identification number, and
user account information (i.e., username
and password), and to select and answer
a security question. Once accepted by
the temporary registration system, the
submitter will receive an e-mail
notification that the account has been
established and the submitter will be
able to access and complete Form
MA–T. The Commission anticipates that
submitters will ordinarily obtain access
credentials the same day that they are
requested. To avoid the possibility of
delay, municipal advisors are
encouraged to allow ample time to
establish an account and obtain access
credentials and submit Form MA–T
before October 1, 2010.
Form MA–T will be accessible
through a link located on the
Commission’s Web site, https://
www.sec.gov, beginning on or about
September 1, 2010, at which time
municipal advisors will be able to
submit forms for temporary registration
and to amend and withdraw such
definitions could create unnecessary uncertainty
and confusion for municipal advisors, some of
whom also must file Form ADV. The following
definitions in the glossary were taken from the
Section 975(e) of the Dodd-Frank Act: ‘‘Associated
Person of a Municipal Advisor,’’ ‘‘Guaranteed
Investment Contract,’’ ‘‘Investment Strategies,’’
‘‘Municipal Advisor,’’ ‘‘Municipal Entity,’’
‘‘Municipal Financial Product,’’ ‘‘Obligated Person,’’
and ‘‘Solicitation of a Municipal Entity or Obligated
Person.’’ ‘‘IARD’’ is a FINRA definition. See supra
text accompanying notes 37–38 for the definition of
‘‘associated municipal advisor professional.’’
PO 00000
Frm 00011
Fmt 4700
Sfmt 4700
54471
registrations through the Commission’s
Web site. Each Form MA–T, including
each amendment to a temporary
registration or withdrawal from
temporary registration, is considered
filed with the Commission upon its
completion on the Commission Web
page established for that purpose and
the Commission has sent confirmation
that the form was filed to the municipal
advisor.
A municipal advisor that completes
the temporary registration form and
receives confirmation from the
Commission that the form was filed will
be temporarily registered for purposes of
Section 15B 47 until the earlier of: (1)
The date that the municipal advisor’s
registration is approved or disapproved
by the Commission pursuant to a final
rule adopted by the Commission
establishing another manner of
registration of municipal advisors and
prescribing a form for such purpose; 48
(2) the date on which the municipal
advisor’s temporary registration is
rescinded by the Commission; or (3) the
expiration of the interim final temporary
rule on December 31, 2011. Comment is
requested concerning the December 31,
2011 expiration date; would an earlier
or later date be more appropriate?
III. Other Matters
The Administrative Procedure Act
generally requires an agency to publish
notice of a proposed rulemaking in the
Federal Register.49 This requirement
does not apply, however, if the agency
‘‘for good cause finds * * * that notice
and public procedure are impracticable,
unnecessary, or contrary to the public
interest.’’ 50 Further, the Administrative
Procedure Act also generally requires
that an agency publish an adopted rule
in the Federal Register 30 days before
it becomes effective.51 This requirement
does not apply, however, if the agency
finds good cause for making the rule
effective sooner.52 The Commission
finds, for good cause, that notice and
solicitation of comment before adopting
the new rules are impracticable,
unnecessary, or contrary to the public
interest.
For the reasons discussed throughout
this release, the Commission finds good
cause to act immediately to adopt these
rules on an interim final temporary
basis. The Dodd-Frank Act amended
Section 15B(a)(2) of the Exchange Act to
47 See
supra note 9.
of a municipal advisor’s registration
under the final permanent rule will replace and
supersede a temporary registration.
49 See 5 U.S.C. 553(b).
50 See id.
51 See 5 U.S.C. 553(d).
52 See id.
48 Approval
E:\FR\FM\08SER1.SGM
08SER1
mstockstill on DSKH9S0YB1PROD with RULES
54472
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
provide that, effective on October 1,
2010, ‘‘[i]t shall be unlawful for a
municipal advisor to provide advice to
or on behalf of a municipal entity or
obligated person with respect to
municipal financial products or the
issuance of municipal securities, or to
undertake a solicitation of a municipal
entity or obligated person, unless the
municipal advisor is registered * * *’’
with the Commission.53 The
Commission is adopting an interim final
temporary rule in order to allow
municipal advisors temporarily to
satisfy the registration requirement in
order that they may continue to act as
municipal advisors on and after October
1, 2010. Absent such means to register,
municipal advisors would likely have to
cease providing all municipal advisory
services, which may have a significant
adverse impact on their businesses and
on municipal entities and obligated
persons engaged in issuing municipal
securities or other activities for which
they obtain the advice of a municipal
advisor. Some municipal entities and
obligated persons do not access the
capital markets frequently and depend
heavily on their municipal advisors in
connection with offerings of municipal
securities. In addition, some municipal
entities and obligated persons, such as
large or frequent issuers, often have
complex financial plans and large
borrowing needs and use municipal
advisors to supply independent, expert
advice concerning long term financial
planning and the use of swaps and other
sophisticated financial products. The
interim final temporary rule is designed
to provide a method by which
municipal advisors may continue to
provide municipal advisory services to
municipal entities and obligated
persons without violating Section
15B(a)(2) of the Exchange Act.
The Commission is requesting
comments on the interim final
temporary rule and will carefully
consider any comments received and
respond to them as necessary or
appropriate. The interim final
temporary rule will expire on December
31, 2011. Setting a termination date for
the interim final temporary rule will
necessitate further Commission action
no later than the end of that period. The
Commission finds that there is good
cause to have the rule effective as an
interim final temporary rule on October
1, 2010, and that notice and public
procedure in advance of effectiveness of
the interim final temporary rule are
53 See
Section 975(a) of the Dodd-Frank Act.
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
impracticable, unnecessary and contrary
to the public interest.54
IV. Paperwork Reduction Act
A. Background
Rule 15Ba2–6T and Form MA–T
contain ‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act of 1995
(‘‘Paperwork Reduction Act’’ or
‘‘PRA’’).55 The title for the collection of
information is ‘‘Temporary Registration
of Municipal Advisors—Form MA–T’’
and the OMB control number for the
collection of information is 3235–0659.
The Commission has submitted these
requirements to the Office of
Management and Budget (‘‘OMB’’) for
review and approval in accordance with
44 U.S.C. 3507(j) and 5 CFR 1320.13.
Separately, the Commission has
submitted the collection of information
to OMB for review and approval in
accordance with 44 U.S.C. 3507(d) and
5 CFR 1320.11. OMB has approved the
collection of information related to
Form MA–T on an emergency basis with
an expiration date of March 31, 2011.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number. As discussed above,
Section 15B of the Exchange Act, as
amended by the Dodd-Frank Act,
requires municipal advisors (as defined
in Section 975 of the Dodd-Frank Act)
to register with the Commission by
October 1, 2010.56 As a transitional step
to the implementation of a final
permanent registration program, the
Commission is today adopting, on an
interim final basis, new Rule 15Ba2–6T,
which will permit municipal advisors to
temporarily satisfy the registration
requirement.
Rule 15Ba2–6T and Form MA–T will
require a municipal advisor to:
• Provide, in Item 1 of Form MA–T,
basic identifying information, including
name; address; telephone number; email address; fax number and Web site
address, if any; and Employer
Identification Number (but not Social
Security Number, in the case, for
example, of a sole proprietor). If the
municipal advisor is also registered
with the Commission as an investment
54 This finding also satisfies the requirements of
5 U.S.C. 808(2), allowing the rule and form to
become effective notwithstanding the requirement
of 5 U.S.C. 801 (if a Federal agency finds that the
notice and public comment are ‘‘impracticable,
unnecessary or contrary to the public interest,’’ a
rule ‘‘shall take effect at such time as the Federal
agency promulgating the rule determines’’).
55 44 U.S.C. 3501 et seq.
56 See paragraphs (a) and (i) of Section 975 of the
Dodd-Frank Act.
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
adviser, broker, dealer, or municipal
securities dealer, it will be required to
provide its Commission file number(s),
and will be required to provide its CRD
number under FINRA’s CRD system or
under IARD, if it has one;
• Indicate, in Item 2 of Form MA–T,
what type of municipal advisory
services it provides by checking one or
more of seven activities listed on Form
MA–T and/or by describing any other
activities; and
• Answer ‘‘Yes’’ or ‘‘No’’ in Item 3 of
Form MA–T to approximately 24
questions concerning any convictions
of—or any guilty or nolo contendere
pleas by—the municipal advisor or any
of its associated municipal advisor
professionals in a felony case over the
last ten years, and any pending felony
charges. It will also ask for information
regarding the municipal advisor or any
of its associated municipal advisor
professionals concerning any
convictions, guilty or nolo contendere
pleas, or pending charges with respect
to a misdemeanor or conspiracy to
commit an offense involving
investments or investment-related
business, fraud, false statements,
omissions, wrongful taking of property,
bribery, perjury, forgery, counterfeiting,
or extortion during the last ten years.
Form MA–T will similarly require
disclosure of disciplinary sanctions
imposed by the Commission, the
Commodity Futures Trading
Commission, and other Federal, State,
or foreign regulatory authorities, or by
self-regulatory agencies, organizations
and commodity exchanges. In addition,
it will inquire about injunctions issued
by domestic or foreign courts in
connection with investment-related
activities, adverse findings by such
courts concerning investment-related
statutes or regulations and pending civil
proceedings that could result in an
injunction or finding.
On the execution page of Form
MA–T, the municipal advisor will be
required to consent to service of any
civil action brought by, or notice of
proceeding before the Commission or
SRO in connection with its municipal
advisory services via registered or
certified mail or confirm telegram to its
contact person. The signatory of Form
MA–T on behalf of, and with the
authority of, the municipal advisor will
be required to represent that the
information and statements contained in
Form MA–T are current, true, and
complete.
Completion of Item 1 of Form MA–T
involves supplying basic identifying
information that should be readily
available to municipal advisors. Item 2
of Form MA–T describes seven types of
E:\FR\FM\08SER1.SGM
08SER1
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
services that may be provided by a
municipal advisor, and an applicant is
asked to check one or more boxes to
identify any type that applies to it. If the
municipal advisor provides other
municipal advisory services that are not
listed in the check-box list, the
municipal advisor must provide a
narrative description of the services.
The Commission estimates that the
paperwork burden of Items 1 and 2 will
be approximately one-half hour.
Providing answers to the questions on
Item 3 of Form MA–T entails gathering
the accurate disciplinary history
information regarding the municipal
advisor and its associated municipal
advisor professionals. Form MA–T will
permit disciplinary actions previously
reported in connection with other
filings (such as Form BD, Form ADV, or
Form U4) to be provided by referencing
such other filings. The Commission
notes, however, that, while an
‘‘associated person of a municipal
advisor,’’ as defined under the DoddFrank Act, includes a broad category of
control persons and employees,57 the
information that must be provided in
Item 3 of Form MA–T concerns a
smaller subset of persons of this
category, namely ‘‘municipal advisor
professionals.’’ A municipal advisor
professional for these purposes is
defined to include only persons who are
directly engaged in municipal advisory
activities, persons in the supervisory
chain overseeing these activities, and
members of the executive or
management committees of the
municipal advisor.58
The Commission believes that the size
of municipal advisors will likely range
from sole proprietorships to large firms,
and will include firms that provide
municipal advisory services as part of a
broader array of financial services
serving many types of clients, and may
have many associated municipal advisor
professionals. Thus the paperwork
burden will vary from applicant to
applicant, depending on its size.
The Commission has previously
estimated that, in the case of Form
ADV—a similar, but far more
comprehensive form than Form MA–T,
which must be completed for the
registration of investment advisers—the
average time necessary to complete the
form is approximately 4.32 hours, and
that estimate has been subject to notice
and comment. The Commission believes
that the paperwork burden of
completing Form MA–T will be less
than this amount of time because this
form is less comprehensive than Form
57 See
58 See
Section 975(e) of the Dodd-Frank Act.
supra text accompanying notes 37–38.
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
ADV and will thus require less time to
complete. The Commission estimates
that the average amount of time for a
municipal advisor to complete Form
MA–T is approximately 2.5 hours. This
estimate includes all of the time
necessary to research, evaluate, and
gather all of the information that is
requested in the form and all of the time
necessary to complete and submit the
form.59
Based on discussions with the MSRB,
the Commission estimates that
approximately 1,000 municipal advisors
will be required to complete Form MA–
T.60 Thus, the total burden hours will be
approximately 2,500 hours.
Once a municipal advisor temporarily
satisfies the registration requirement,
the municipal advisor must promptly
amend Form MA–T when information
concerning Items 1 or 3 on Form MA–
T becomes inaccurate or to withdraw
from registration. The Commission
estimates that the average time
necessary to complete an amended form
would be approximately 30 minutes
because only certain parts of the form
will be completed for amendments. For
the purposes of this PRA analysis, the
Commission assumes that all 1,000
municipal advisors would have to
amend their forms once during the
period September 1, 2010 and December
31, 2011. The estimate of the number of
municipal advisors that will submit
amendments is likely to be lower than
all 1,000 as some municipal advisors
will not have any changes to their forms
during this period. It is also likely that
some of these 1,000 municipal advisors
will have to submit more than one
amendment. However, given the short
transition period, the Commission
believes that on balance its estimate of
one amendment for each municipal
advisors is conservative. Therefore, the
total burden for these amendments
during this period would be 500
hours,61 and the total estimated
paperwork burden for Form MA–T and
59 The Commission notes that some municipal
advisors that are required to register under Rule
15Ba2–6T will also be registered with the
Commission as broker-dealers and/or investment
advisers. The Commission believes that these
persons could require less time to research and
complete this temporary registration process to the
extent information contained in those other
registration(s) can be cross-referenced, avoiding the
need to repeat information on Form MA–T.
60 Telephone call between Martha Mahan Haines,
Commission, and Ernesto Lanza, General Counsel,
MSRB on August 17, 2010 (estimating the number
of persons required to complete Form MA–T). The
MSRB is the self-regulatory organization created by
Congress to oversee the municipal securities
market.
61 500 hours = 1,000 (persons required to amend
Form MA–T) × 0.5 (30 minutes) (estimated time to
complete amended Form MA–T).
PO 00000
Frm 00013
Fmt 4700
Sfmt 4700
54473
keeping it properly updated is 3,000
hours.62
In addition, the Commission believes
that some municipal advisors will seek
outside counsel to help them comply
with the requirements of Rule 15Ba2–6T
and Form MA–T. For PRA purposes, the
Commission assumes that all 1,000
municipal advisors will on average
consult outside counsel for one hour to
help them comply with the
requirements. The Commission believes
that the estimate of the number of
municipal advisors that will consult
outside counsel is likely to be lower
than 1,000 as some municipal advisors
will choose not to seek outside counsel
or will rely entirely on in-house
counsel. The Commission also
recognizes that some municipal advisors
will hire outside counsel for more than
one hour and others may hire counsel
for less than one hour. On balance, the
Commission believes that its estimate
that on average each municipal advisor
will hire outside counsel for one hour
is conservative. The Commission
estimates that the total cost for all
municipal advisors to hire outside
counsel to review their compliance with
the requirements of Rule 15Ba2–6T and
Form MA–T to be approximately
$400,000.63
B. Collection of Information Is
Mandatory
Any collection of information
pursuant to Rule 15Ba2–6T and Form
MA–T is a mandatory collection of
information.
C. Responses to Collection of
Information Will Not Be Kept
Confidential
The collection of information made
pursuant to Rule 15Ba2–6T will not be
confidential and will be made publicly
available. The collection of information
that will be provided pursuant to the
Form MA–T will be publicly available
via the Internet.
62 3,000 = 2,500 hours (total estimated burden to
complete Form MA–T for all municipal advisors) +
500 hours (total estimated burden to complete
amendments to Form MA–T for all municipal
advisors).
63 $400,000 = 1,000 (estimated number municipal
advisors that hire outside attorney) × 1 hour
(estimated time spent by outside attorney to help
municipal advisor comply with rule) × $400 (hourly
rate for an attorney). The $400 per hour figure for
an attorney is from the Securities Industry and
Financial Markets Association’s publication titled
Management & Professional Earnings in the
Securities Industry 2009, as modified by
Commission staff to account for an 1,800 hour work
year and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
E:\FR\FM\08SER1.SGM
08SER1
54474
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
V. Cost-Benefit Analysis
mstockstill on DSKH9S0YB1PROD with RULES
A. Introduction
The Commission is sensitive to the
costs and benefits of its rules. The
Commission has identified certain costs
and benefits of Rule 15Ba2–6T and
Form MA–T and request comment on
all aspects of this cost-benefit analysis.
Where possible, the Commission
requests that commenters provide
empirical data to support any positions
advanced.
The Commission is adopting, as an
interim final temporary rule, Rule
15Ba2–6T and Form MA–T for the
temporary registration of municipal
advisors. The Commission is adopting
this rule and Form MA–T in response to
the changes implemented by the DoddFrank Act, which prohibits municipal
advisors from providing municipal
advisory services to a municipal entity
or obligated person, unless the
municipal advisor is registered.
B. Benefits
Section 975 of the Dodd-Frank Act
generally is intended to strengthen
oversight of municipal securities and
broaden current municipal securities
market protections to cover, among
other things, previously unregulated
market participants. Rule 15Ba2–6T and
Form MA–T are designed to meet this
objective temporarily by requiring each
municipal advisor to provide basic
identifying information about itself, a
description of its activities, and facts
regarding its disciplinary history, if any,
and that of any of its associated
municipal advisor professionals. This
transitional registration process will
allow municipal advisors to temporarily
satisfy the registration requirement in
order that they may continue to act as
municipal advisors on and after October
1, 2010. Absent such a means to register,
municipal advisors would have to cease
providing municipal advisory services,
which may have a significant adverse
impact on their businesses and on
municipal entities and obligated
persons engaged in issuing municipal
securities or other activities for which
they obtain the advice of a municipal
advisor. The interim final temporary
rule is designed to provide a method by
which municipal advisors may continue
to provide municipal advisory services
to municipal entities and obligated
persons without violating Section
15B(a)(2) of the Exchange Act.
In addition, disclosure of the
disciplinary history of every municipal
advisor—sole proprietor or large firm—
and every municipal advisor
professional will become available, not
only to regulators, but also to all
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
members of the investing community,
benefitting investors, municipal entities
and the general public in the area of
municipal investments. Municipal
entities issuing securities and obligated
persons will have access to this
information and thus will be more fully
informed when choosing those who
would guide them and issue and
support quality investment vehicles.
Also, the standardization of the required
disclosure format would lower the costs
for municipal entities in comparing
municipal advisors. Lower costs
generally make the market more
competitive. The Commission believes
that this will benefit the municipal
market, and ultimately could benefit
State and local governments that raise
funds for the good and welfare of their
citizens, including roads, bridges,
energy and other necessary utility
infrastructures, as well as education,
health, safety, and the wide range of
other benefits and social support that
these governments provide.
C. Costs
In promulgating the provisions of
Section 975 of the Dodd-Frank Act,
Congress established a mandatory
registration regime for municipal
advisors. The establishment of this
Congressionally-mandated regulatory
regime for municipal advisors will
impose burdens on municipal advisors
to register with the Commission and to
comply with Commission rules. In order
to temporarily satisfy the registration
requirement, municipal advisors must
complete Form MA–T on the
Commission’s public Web site. The
Commission believes that municipal
advisors will principally incur these
costs when the rule and the form take
effect on October 1, 2010. As noted in
the PRA section above, the Commission
estimated that the total one-time
reporting burden for all municipal
advisors to complete Form MA–T would
be approximately 2,500 hours. Based on
this estimate, the Commission believes
the total labor cost for all municipal
advisors to complete the Form MA–T
will be approximately $735,000.64
Municipal advisors will also incur costs
when they need to amend or withdraw
the registration. As noted in the PRA
64 2,500 hours (total estimated hourly burden
under the rule for all municipal advisors to
complete a Form MA–T) × $294 (hourly rate for a
Compliance Manager) = $735,000. The $294 per
hour figure for a Compliance Manager is from the
Securities Industry and Financial Markets
Association’s publication titled Management &
Professional Earnings in the Securities Industry
2009, as modified by Commission staff to account
for an 1,800 hour work year and multiplied by 5.35
to account for bonuses, firm size, employee benefits
and overhead.
PO 00000
Frm 00014
Fmt 4700
Sfmt 4700
section above, the Commission
estimated that the total hourly burden
for all municipal advisors to complete
an amended Form MA–T would be
approximately 500 hours. Based on this
estimate, the Commission believes the
total annual labor cost for all municipal
advisors to complete an amended Form
MA–T will be approximately
$147,000.65 In addition to the costs
associated with completing and
amending Form MA–T, the Commission
also believes that some persons will
incur costs associated with hiring
outside counsel to help them determine
whether they must file and to comply
with the requirements of Rule 15Ba2–6T
and Form MA–T. As noted in the PRA
section above, the Commission
estimated that the total cost for all
municipal advisors to hire outside
counsel to review their compliance with
the requirements of Rule 15Ba2–6T and
Form MA–T to be approximately
$400,000.66
The Commission does not believe that
the process of temporary registration
through Form MA–T will be particularly
burdensome—given the brevity of the
form, its convenient availability online,
and the automated manner of
submitting the information. However,
costs will be incurred in completing the
disciplinary information sections of
Form MA–T, which will demand care in
compiling legally accurate statements of
disciplinary history of a municipal
advisor and its associated municipal
advisor professionals. The Commission
has reflected these estimated costs
discussed above. The Commission also
recognizes the possibility that the cost
of registering could be passed on to the
municipal entity customers of
municipal advisors in the form of higher
fees. Given the relatively small
magnitude of these costs and the large
number of municipal entity issuers
(nearly 51,000 issuers as of 2009),67 the
Commission expects any increase in
municipal advisory fees attributable to
registration would be minimal.
65 500 hours (total estimated hourly burden under
the rule for all municipal advisors to complete an
amended Form MA–T) × $294 (hourly rate for a
Compliance Manager) = $147,000. The $294 per
hour figure for a Compliance Manager is from the
Securities Industry and Financial Markets
Association’s publication titled Management &
Professional Earnings in the Securities Industry
2009, as modified by Commission staff to account
for an 1,800 hour work year and multiplied by 5.35
to account for bonuses, firm size, employee benefits
and overhead.
66 See supra Section IV.A.
67 See Securities Exchange Act Release No.
62184A (May 26, 2010), 75 FR at 33101 (June 10,
2010).
E:\FR\FM\08SER1.SGM
08SER1
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
D. Request for Comment
The Commission requests comment
on all aspects of this cost-benefit
analysis. Commenters should address in
particular whether Rule 15Ba2–6T and
Form MA–T will generate the
anticipated benefits or impose any other
costs in municipal advisors. The
Commission also requests comment as
to any costs or benefits associated with
Rule 15Ba2–6T and Form MA–T that
may not have been considered here,
including whether the costs associated
with the rule will have a
disproportionate impact on certain
municipal advisors.
mstockstill on DSKH9S0YB1PROD with RULES
VI. Promotion of Efficiency,
Competition, and Capital Formation
Section 3(f) of the Exchange Act
requires the Commission, whenever it
engages in rulemaking and is required to
consider or determine whether an action
is necessary or appropriate in the public
interest, to consider, in addition to the
protection of investors, whether the
action would promote efficiency,
competition and capital formation.68 In
addition, Section 23(a)(2) of the
Exchange Act requires the Commission,
when making rules under the Exchange
Act, to consider the impact such rules
would have on competition.69 Exchange
Act Section 23(a)(2) prohibits the
Commission from adopting any rule that
would impose a burden on competition
not necessary or appropriate in
furtherance of the purposes of the
Exchange Act. As discussed below, the
Commission believes that Rule 15Ba2–
6T may promote efficiency and
competition, and is likely to have no
impact on capital formation.
A. Efficiency
In adopting Rule 15Ba2–6T, the
Commission has considered its effect on
efficiency, competition and capital
formation. Rule 15Ba2–6T and Form
MA–T are designed to improve the
efficiency of the Commission’s oversight
of municipal advisors, by requiring the
registration and identification to the
Commission, for the first time, of people
engaged in providing municipal
advisory services. The temporary
registration of municipal advisors will
facilitate the Congressional mandate to
register municipal advisors and
establish an efficient system to provide
information to the Commission, the
public, and municipal entities.
B. Competition
The Commission also believes that
adoption of Rule 15Ba2–6T may
68 15
69 15
U.S.C. 78c(f).
U.S.C. 78w(a)(2).
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
promote competition of municipal
advisory service providers by allowing
municipal advisors to temporarily
satisfy the registration requirement that
is mandated by October 1, 2010 under
the Dodd-Frank Act and thus be
permitted to continue to provide advice
to, or on behalf of, a municipal entity or
obligated person with respect to
municipal financial products or the
issuance of municipal securities, or to
undertake a solicitation of a municipal
entity or obligated person on October 1,
2010. In addition, it may promote
competition by making uniform
information, especially disciplinary
information, for all municipal advisors
available to consumers of the services of
municipal advisors on which to base a
selection. Furthermore, because all
municipal advisors must register, none
would be placed at a competitive
advantage or disadvantage over others.
The Commission believes that Rule
15Ba2–6T will not result in a burden on
competition that is not necessary or
appropriate in furtherance of the
Exchange Act.
C. Capital Formation
The Commission has also considered
the effect of Rule 15Ba2–6T on capital
formation. Rule 15Ba2–6T allows
municipal entities and obligated
persons issuing securities to better
choose their advisors based on the
information required to be disclosed by
Rule 15Ba2–6T; however, this benefit
would most likely only affect the way in
which municipal entities and obligated
persons choose municipal advisors, but
would likely have no impact on capital
formation because it does not affect the
borrowing needs of municipal entities
or obligated persons. Therefore, the
Commission believes that the rule is not
likely to have an effect on capital
formation.
The Commission requests comment
on this analysis of whether the adoption
of Rule 15Ba2–6T will promote
efficiency, competition, and capital
formation or have an impact or burden
on competition. The Commission seeks
comments on whether Rule 15Ba2–6T
would promote capital formation.
Specifically, the Commission requests
comments on the extent to which the
ability of municipal entities and
obligated persons to obtain information
concerning registered municipal
advisors from Form MA–T before hiring
a municipal advisor would promote
capital formation. In addition, the
Commission seeks comments on the
manner and extent to which Rule
15Ba2–6T would assist municipal
entities and obligated persons to raise
additional capital. The Commission
PO 00000
Frm 00015
Fmt 4700
Sfmt 4700
54475
requests commenters to provide
empirical data and other factual support
for their views, if possible.
VII. Final Regulatory Flexibility
Analysis
The Commission has prepared this
Final Regulatory Flexibility Analysis
(FRFA) in accordance with Section
604(a) of the Regulatory Flexibility Act
(RFA).70 This FRFA relates to new Rule
15Ba2–6T under the Exchange Act,
which will permit municipal advisors to
temporarily satisfy the registration
requirement set forth in the Dodd-Frank
Act until such time as the Commission
promulgates a final permanent
regulatory program.71
Section 975 of the Dodd-Frank Act
generally is intended to strengthen
oversight of municipal securities and
broaden current municipal securities
market protections to cover, among
other things, previously unregulated
market participants. Rule 15Ba2–6T and
Form MA–T are designed to meet this
mandate by requiring each municipal
advisor to provide basic identifying
information about itself, a description of
its activities, and facts regarding its
disciplinary history, if any, and that of
any of its associated persons who are
municipal advisor professionals.
A. Need for and Objectives of the Rule
and Form MA–T
Sections I–III of this Release describe
the reasons for and objectives of interim
final temporary Rule 15Ba2–6T and
Form MA–T. As discussed above, the
Commission is adopting an interim final
temporary rule that establishes a means
for municipal advisors, as defined in the
Dodd-Frank Act, to satisfy temporarily
the requirement that they register with
the Commission by October 1, 2010.
This rule and form are necessary so that
municipal advisors can meet this
Congressional mandate and continue to
function as municipal advisors.
B. Small Entities Subject to the Rule
In developing Rule 15Ba2–6T and
Form MA–T, the Commission has
considered their potential impact on
small entities that will be subject to the
rule. All municipal advisors must
register with the Commission, including
small entities, and will be subject to the
rule. Because ‘‘municipal advisor’’ is a
new term under the Dodd-Frank Act,
70 See
5 U.S.C. 604(a).
the requirements of the RFA are not
applicable to Rules adopted under the
Administrative Procedures Act’s ‘‘good cause’’
exception, see 5 U.S.C. 601(2) (defining ‘‘rule’’ and
notice requirement under the Administrative
Procedures Act), the Commission nevertheless
prepared this Final Regulatory Flexibility Act
Analysis.
71 Although
E:\FR\FM\08SER1.SGM
08SER1
54476
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
mstockstill on DSKH9S0YB1PROD with RULES
the Commission has not promulgated a
rule to define which municipal advisors
should be identified as a ‘‘small
business’’ or ‘‘small organization’’ for
purposes of the RFA. However, the
Commission has referred to its
definitions of small entities in the
Exchange Act and Investment Advisers
Act to inform this FRFA.
Paragraph (c)(1) of Rule 0–10 under
the Exchange Act 72 states that the terms
‘‘small business’’ or ‘‘small organization,’’
when referring to a broker-dealer, means
a broker or dealer that has total capital
(net worth plus subordinated liabilities)
of less than $500,000 on the date in the
prior fiscal year as of which its audited
financial statements were prepared
pursuant to Section 240.17a–5(d); and is
not affiliated with any person (other
than a natural person) that is not a small
business or small organization. As
discussed above, based on industry
sources, the Commission estimates that
approximately 1,000 municipal advisors
must complete Form MA–T on the
Commission’s public Web site.73
Industry sources were unable to provide
an estimate, based on the definitions
discussed above, of how many of these
advisors would be a small business or
small organization. However, for the
purpose of this FRFA, the Commission
believes that the proportion of small
municipal advisors subject to the rule to
all registered municipal advisors subject
to the rule may be similar to the
proportion of small registered brokerdealers to all registered broker-dealers.
The Commission has previously
estimated that approximately 17% of all
broker-dealers are ‘‘small’’ for the
purposes of the RFA.74 Therefore, the
Commission estimates that 170
municipal advisors will be small
entities subject to the rule.75
The Commission requests comment
on its estimate of how many municipal
advisors would be small entities for
purposes of the RFA. Specifically, the
Commission seeks comment on whether
there are alternative ways to estimate
the number of municipal advisors that
are small entities. Is the proportion of
small registered municipal advisors to
all registered municipal advisors for
purposes of the RFA similar to the
proportion of small registered brokerdealers to all registered broker-dealers?
72 17
CFR 240.0–10(c)(1).
supra Section IV.A.
74 See Securities Exchange Act Release No. 34–
61908 (April 14, 2010), 75 FR 21456, 21483 (April
23, 2010).
75 170 = 1,000 (estimated number of municipal
advisors subject to the Rule) × .17 (estimated
percentage of municipal advisors that are small
entities).
73 See
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
As noted above, the Commission has
defined in Rule 0–10 small entity under
the Exchange Act for purposes of the
RFA. Should the Commission consider
including in that rule criteria
specifically related to municipal
advisors? For example, should it depend
on the number of municipalities the
municipal advisor advises? On the
number of issuances with respect to
which the municipal advisor provides
advice? On the total amount of
issuances outstanding for the
municipalities the advisor advises? On
other factors or a combination of
factors?
C. Projected Reporting, Recordkeeping,
and Other Compliance Requirements
Rule 15Ba2–6T and Form MA–T
impose certain reporting and
compliance requirements on small
municipal advisors, requiring them to
provide basic identifying information
about themselves, a description of their
activities, and facts regarding their
disciplinary history, if any, and that of
any of their associated persons who are
municipal advisor professionals.76 The
rule does not impose any recordkeeping
requirements.
As discussed above, current
municipal advisors are required by
statute to register with the Commission
by October 1, 2010 by completing Form
MA–T. Form MA–T will be accessible
through a link located on the
Commission’s Web site, https://
www.sec.gov, beginning on or about
September 1, 2010, at which time
municipal advisors will be able to
submit forms for temporary registration
and to amend and withdraw such
registrations through the Commission’s
Web site.
As noted above, the Commission
estimated that the total initial reporting
burden for all municipal advisors to
complete Form MA–T would be
approximately 2,500 hours and the total
associated cost to complete the Form is
approximately $735,000.77 Municipal
advisors will also incur costs when they
need to amend or withdraw the
registration. As noted above, the
Commission estimated that the total
hourly burden for all municipal
advisors to complete an amended Form
MA–T would be approximately 500
hours.78 The Commission estimates that
the total annual labor cost for all
municipal advisors to complete an
amended Form MA–T will be
76 Sections I–III of this Release describe these
requirements in more detail.
77 See supra Sections IV.A. and V.C.
78 See supra Section IV.A.
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
approximately $147,000.79 In addition
to the costs associated with completing
and amending Form MA–T, the
Commission also believes that some
municipal advisors will incur costs
associated with hiring outside counsel
to determine the need to file and to
comply with the requirements of Rule
15Ba2–6T and Form MA–T. As noted
above, the Commission estimates that
the total costs for all municipal advisors
to hire outside counsel to be
approximately $400,000.80
D. Agency Action To Minimize Effect on
Small Entities
As required by the RFA, the
Commission has considered alternatives
that would accomplish the stated
objectives, while minimizing any
significant adverse impact on small
entities. Rule 15Ba2–6T should not
adversely affect small entities because it
imposes minimal new reporting
requirements to complete Form MA–T
and submit it electronically on the
Commission’s Web site. The
Commission does not believe that it is
appropriate to develop separate
requirements for small entities because
all municipal advisors should be subject
to the same temporary registration
process. In developing Rule 15Ba2–6T
and Form MA–T, the Commission
considered requiring additional
information from municipal advisors
and using different electronic delivery
mechanisms. After taking into account
the short timeframe for municipal
advisors to comply with the
Congressional mandate to register with
the Commission, the Commission
determined that the Rule 15Ba2–6T and
Form MA–T strikes the appropriate
balance of minimizing the burden on
small municipal advisors while
allowing the Commission to meet its
mandate under the Dodd-Frank Act.
Counteracting these relatively minor
costs is the benefit that small advisors
in particular would obtain under the
new regime. The registration of
municipal advisors (large or small)
would improve the availability of
information and thus reduce
information research costs of investors
and issuers in the municipal bond
market. These information research
costs are generally higher with respect
to smaller entities, about which it is
often more difficult to obtain
information than for large entities. The
increased availability of information
about smaller entities may have the
result that more investors and issuers
will locate those entities and be willing
79 See
80 See
E:\FR\FM\08SER1.SGM
supra Section V.C.
supra Section IV.A.
08SER1
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
to engage their services. Thus, smaller
advisors are likely to benefit
proportionally more from the improved
and relatively standardized disclosure
than the larger, more established
entities, which might already be
disclosing information for other
purposes (for example, if they are
broker-dealers, or underwriters).
mstockstill on DSKH9S0YB1PROD with RULES
E. Duplicative, Overlapping, or
Conflicting Federal Rules
The Commission believes that there
are no rules that duplicate, overlap, or
conflict with Rule 15Ba2–6T.
F. Significant Alternatives
The RFA directs the Commission to
consider significant alternatives that
would accomplish the stated objective,
while minimizing any significant
adverse impact on small entities.81 In
connection with the interim final
temporary rule, the Commission
considered the following alternatives:
(1) Establishing different compliance or
reporting standards that take into
account the resources available to small
entities; (2) clarifying, consolidating, or
simplifying compliance requirements
under the rule; (3) using performance
rather than design standards; and (4)
exempting small municipal advisers
from coverage of all or part of the Rule
15Ba2–6T and Form MA–T.
The Commission believes that the
interim final temporary rule strikes the
appropriate balance between
minimizing the burden on small
municipal advisors and allowing the
Commission to meet its mandate under
the Dodd-Frank Act to provide an
appropriate and meaningful process for
registering municipal advisors. The
Commission does not believe that
establishing different compliance or
reporting standards is necessary because
the information requested in Form MA–
T is basic and minimally necessary to
meet the statutory goals of the DoddFrank Act. Moreover, the Commission
believes that completing and submitting
Form MA–T on the Commission’s Web
site should not be unduly burdensome
or costly for municipal advisors,
including small municipal advisors. In
developing Rule 15Ba2–6T and Form
MA–T, the Commission considered
requiring additional information from
municipal advisors and using different
electronic delivery mechanisms. In light
of the relatively short time frame for
compliance and the resources available
to small municipal issuers, the
Commission decided that the
information in the Form MA–T and the
electronic submission requirements are
simple, straightforward, and take into
account the resources available to all
municipal advisors, including small
municipal advisors. The Commission
believes that it is inconsistent with the
goals of a uniform registration system to
use performance standards rather than
design standards. Further, the
Commission believes that it would be
inconsistent with the purposes of the
Dodd-Frank Act to exempt small entities
entirely from having to comply with the
interim final temporary rule.
G. General Request for Comment
The Commission is soliciting
comments regarding the analysis. The
Commission requests comment on the
number of small entities that will be
subjected to the rule and whether the
interim final temporary rule will have
any effects that have not been discussed.
The Commission requests that
commenters describe the nature of any
effects on small entities subject to the
rule and provide empirical data to
support the nature and extent of the
effect.
VIII. Statutory Authority
Pursuant to the Exchange Act, and
particularly Sections 15B (15 U.S.C.
78o–4) and 36 (15 U.S.C. 78mm), the
Commission is adopting § 240.15Ba2–6T
and 249.1300T of Title 17 of the Code
of Federal Regulations in the manner set
forth below.
List of Subjects in 17 CFR Parts 240 and
249
Reporting and recordkeeping
requirements, Municipal advisors,
temporary registration requirements.
Text of Rule
For the reasons set out in the
preamble, Title 17, Chapter II, of the
Code of Federal Regulations is amended
as follows.
■
PART 240—GENERAL RULES AND
REGULATIONS, SECURITIES
EXCHANGE ACT OF 1934
1. The general authority citation for
part 240 is revised to read as follows:
■
Authority: 15 U.S.C. 77c, 77d, 77g, 77j,
77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn,
77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j,
78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78o–
4, 78p, 78q, 78s, 78u–5, 78w, 78x, 78ll,
78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b–
3, 80b–4, 80b–11, and 7201 et seq.; 18 U.S.C.
1350; and 12 U.S.C. 5221(e)(3), unless
otherwise noted.
*
*
*
*
*
81 See
5 U.S.C. 603(c).
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00017
Fmt 4700
Sfmt 4700
§ 240.15Ba2–6T Temporary registration as
a municipal advisor; required amendments;
and withdrawal from temporary registration.
(a) A municipal advisor (as defined in
Section 15B(e)(4) of the Securities
Exchange Act of 1934 (the ‘‘Act’’) (15
U.S.C. 78o–4(e)(4)) shall file with the
Commission, pursuant to Section 15B(a)
(15 U.S.C. 78o–4(a)) of the Act, the
information set forth on Form MA–T (17
CFR 249.1300T) electronically through
the Commission’s Internet Web site
(https://www.sec.gov) to temporarily
register or to withdraw from temporary
registration.
(b) A temporary registration must
promptly be amended:
(1) Whenever any information
concerning Items 1 or 3 of Form MA–
T (17 CFR 249.1300T) have become
inaccurate in any way; and
(2) Whenever a municipal advisor
wishes to withdraw from registration.
(c) Every initial registration and each
amendment to a registration or
withdrawal from registration filed
pursuant to this rule shall constitute a
‘‘report’’ within the meaning of Sections
15B(c) (15 U.S.C. 78o–4(c)), 17(a) (15
U.S.C. 78q(a)), 18(a) (15 U.S.C. 78r(a))
and 32(a) (15 U.S.C. 78ff(a)) and other
applicable provisions of the Act.
(d) Each Form MA–T (17 CFR
249.1300T), including each amendment
to a registration or withdrawal from
registration, is considered filed with the
Commission upon its completion on the
Commission web page established for
that purpose and the Commission has
sent confirmation that the form was
filed to the municipal advisor.
(e) All temporary registrations
submitted pursuant to this section will
expire on the earlier of:
(1) The date that the municipal
advisor’s registration is approved or
disapproved by the Commission
pursuant to a final rule adopted by the
Commission establishing another
manner of registration of municipal
advisors and prescribing a form for such
purpose;
(2) The date on which the municipal
advisor’s temporary registration is
rescinded by the Commission; or
(3) On December 31, 2011.
(f) This section will expire on
December 31, 2011.
PART 249—FORMS, SECURITIES
EXCHANGE ACT OF 1934
3. The authority citation for part 249
continues to read in part as follows:
■
Authority: 15 U.S.C. 78a et seq. and 7201;
and 18 U.S.C. 1350 et seq. unless otherwise
noted.
*
2. Section 240.15Ba2–6T is added to
read as follows.
■
54477
*
*
*
*
4. Subpart N, consisting of
§ 249.1300T, is added to read as follows.
■
E:\FR\FM\08SER1.SGM
08SER1
54478
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
Subpart N—Forms for Registration of
Municipal Advisors
§ 249.1300T Form MA–T—For temporary
registration as a municipal advisor, and for
amendments to, and withdrawals from,
temporary registration.
mstockstill on DSKH9S0YB1PROD with RULES
The form shall be used for temporary
registration as a municipal advisor, and
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
for amendments to, and withdrawals
from, temporary registration pursuant to
Section 15B of the Exchange Act, (15
U.S.C. 78o).
[Note: The text of Form MA–T does not, and
the amendments will not, appear in the Code
of Federal Regulations.]
BILLING CODE 8010–01–P
PO 00000
Frm 00018
Fmt 4700
Sfmt 4700
E:\FR\FM\08SER1.SGM
08SER1
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00019
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
54479
ER08SE10.003</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
VerDate Mar<15>2010
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00020
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.004</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
54480
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00021
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
54481
ER08SE10.005</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
VerDate Mar<15>2010
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00022
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.006</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
54482
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00023
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
54483
ER08SE10.007</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
VerDate Mar<15>2010
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00024
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.008</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
54484
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00025
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
54485
ER08SE10.009</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
VerDate Mar<15>2010
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00026
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.010</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
54486
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00027
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
54487
ER08SE10.011</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
VerDate Mar<15>2010
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00028
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.012</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
54488
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00029
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
54489
ER08SE10.013</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
VerDate Mar<15>2010
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00030
Fmt 4700
Sfmt 4725
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.014</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
54490
Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Rules and Regulations
Dated: September 1, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010–22255 Filed 9–7–10; 8:45 am]
BILLING CODE 8010–01–C
VerDate Mar<15>2010
17:27 Sep 07, 2010
Jkt 220001
PO 00000
Frm 00031
Fmt 4700
Sfmt 9990
E:\FR\FM\08SER1.SGM
08SER1
ER08SE10.015</GPH>
mstockstill on DSKH9S0YB1PROD with RULES
By the Commission.
54491
]]>Agencies
[Federal Register Volume 75, Number 173 (Wednesday, September 8, 2010)]
[Rules and Regulations]
[Pages 54465-54491]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22255]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 240 and 249
[Release No. 34-62824; File No. S7-19-10]
RIN 3235-AK69
Temporary Registration of Municipal Advisors
AGENCY: Securities and Exchange Commission.
ACTION: Interim final temporary rule; Request for comments.
-----------------------------------------------------------------------
SUMMARY: The Commission is adopting an interim final temporary rule
that establishes a means for municipal advisors, as defined in the
Dodd-Frank Wall Street Reform and Consumer Protection Act \1\ (``Dodd-
Frank Act''), to satisfy temporarily the requirement that they register
with the Commission by October 1, 2010.
---------------------------------------------------------------------------
\1\ See Dodd-Frank Wall Street Reform and Consumer Protection
Act, Pub. L. 111-203 (2010).
DATES: Effective Date: October 1, 2010 through December 31, 2011.
---------------------------------------------------------------------------
Comments should be received on or before October 8, 2010.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/interim-final-temp.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. S7-19-10 on the subject line; or
Use the Federal eRulemaking Portal (https://www.regulations.gov). Follow the instructions for submitting comments.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. S7-19-10. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (https://www.sec.gov/rules/interim-final-temp.shtml).
Comments are also available for Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549 on official business days between the hours of 10 a.m. and 3 p.m.
All comments received will be posted without change; we do not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT: Martha Mahan Haines, Assistant
Director and Chief, Office of Municipal Securities, at (202) 551-5681;
Ira L. Brandriss, Special Counsel, Office of Market Supervision, at
(202) 551-5651; Steve L. Kuan, Special Counsel, Office of Market
Supervision, at (202) 551-5624; Rahman J. Harrison, Special Counsel,
Office of Market Supervision, at (202) 551-5663; Steven Varholik,
Special Counsel, Office of Market Supervision, at (202) 551-5615; Leigh
W. Duffy, Attorney-Adviser, Office of Market Supervision, at (202) 551-
2938; or any of the above at Division of Trading and Markets,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-6628.
SUPPLEMENTARY INFORMATION: The Commission is adopting new Rule 15Ba2-6T
\2\ under the Securities Exchange Act of 1934 \3\ (the ``Exchange
Act'') as an interim final temporary rule. The rule will expire at
11:59 p.m. Eastern Time on December 31, 2011. The Commission is
soliciting comments on all aspects of the interim final temporary rule.
The Commission will carefully consider any comments received and
intends to respond as necessary or appropriate. The Commission expects
to consider a proposal for a final permanent registration program,
including detailed requirements for the registration of municipal
advisors, and to seek public comment on the proposal before its
adoption. Persons interested in commenting on the final permanent
municipal advisor registration program should submit comments to the
subsequent proposal.
---------------------------------------------------------------------------
\2\ 17 CFR 240.15Ba2-6T.
\3\ 15 U.S.C. 78a et seq.
---------------------------------------------------------------------------
I. Introduction
As part of the Dodd-Frank Act, signed into law by President Obama
on July 21, 2010, Congress amended Section 15B(a) of the Exchange Act
\4\ to, among other things, make it unlawful for municipal advisors, as
defined below,\5\ to provide certain advice or solicit municipal
entities or certain other persons without registering with the
Commission.\6\ The registration requirement for municipal advisors
becomes effective on October 1, 2010, meaning that municipal advisors
must be registered on that date in order to continue their municipal
advisory services.\7\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78o-4(a). All references in this Release to the
Exchange Act refer to the Exchange Act as amended by the Dodd-Frank
Act.
\5\ See infra Section II.A.
\6\ See Section 975(a)(1)(B) of the Dodd-Frank Act; 15 U.S.C.
78o-4(a)(1)(B).
\7\ See Section 975(i) of the Dodd-Frank Act.
---------------------------------------------------------------------------
The Commission is today adopting, on an interim final temporary
basis, new Rule 15Ba2-6T \8\ under the Exchange Act, which will permit
municipal advisors to temporarily satisfy the registration requirement.
The adoption of Rule 15Ba2-6T serves as a transitional step to the
implementation of a final permanent registration program, makes
relevant information available to the public and municipal entities,
and permits municipal advisors to continue their business after October
1, 2010. A municipal advisor may temporarily satisfy the statutory
registration requirement by submitting certain information
electronically through the Commission's public Web
[[Page 54466]]
site on new Form MA-T, which is designed for this purpose.\9\
---------------------------------------------------------------------------
\8\ 17 CFR 240.15Ba2-6T.
\9\ 17 CFR 249.1300T. A municipal advisor that completes the
temporary registration form and receives confirmation from the
Commission that the form was filed will be temporarily registered
for purposes of Section 15B. See also infra notes 47-48 and
accompanying text.
---------------------------------------------------------------------------
Because entry of information into Form MA-T will require
establishing an account and securing access credentials (username and
password) as explained in more detail below, municipal advisors are
advised to allow ample time to establish an account and obtain such
credentials and complete the form before October 1, 2010.\10\ The form
and instructions for requesting access credentials will be accessible
through a link located on the Commission's Web site, https://www.sec.gov, beginning on or about September 1, 2010.
---------------------------------------------------------------------------
\10\ In order to establish an account and obtain access
credentials with the temporary registration system for Form MA-T on
the Commission's secure Web site, a submitter will need to fill out
general user information fields such as name, address, phone number,
e-mail address, organization name and employer identification
number, and user account information (i.e., username and password),
and to select and answer a security question. Once accepted by the
temporary registration system, the submitter will receive an e-mail
notification that the account has been established and the submitter
will be able to access and complete Form MA-T. The Commission staff
anticipates that submitters will ordinarily obtain access
credentials the same day that they are requested. However, to avoid
the possibility of delay, all municipal advisors are encouraged to
allow ample time to establish an account and obtain access
credentials and complete Form MA-T by October 1, 2010.
---------------------------------------------------------------------------
II. Discussion
Section 15B(a)(1) of the Exchange Act, as amended by Section
975(a)(1)(B) of the Dodd-Frank Act, makes it unlawful for a municipal
advisor to provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial products or the
issuance of municipal securities, or to undertake a solicitation of a
municipal entity or obligated person, unless the municipal advisor is
registered with the Commission.\11\ Section 15B(a)(2) of the Exchange
Act, as amended by Section 975(a)(2) of the Dodd-Frank Act, provides
that a municipal advisor may be registered by filing with the
Commission an application for registration in such form and containing
such information and documents concerning the municipal advisor and any
person associated with the municipal advisor as the Commission, by
rule, may prescribe as necessary or appropriate in the public interest
or for the protection of investors.
---------------------------------------------------------------------------
\11\ For definitions of the terms ``municipal entity,''
``obligated person,'' ``municipal financial product,'' and
``solicitation of a municipal entity or obligated person,'' see
infra, notes 13-17.
---------------------------------------------------------------------------
The Commission is adopting an interim final temporary rule, Rule
15Ba2-6T, in order to provide a method for municipal advisors to
temporarily satisfy the statutory registration requirement of Section
15B(a)(1) of the Exchange Act (as amended by Section 975(a)(1) of the
Dodd-Frank Act) until the Commission has promulgated a final permanent
registration program. The interim final temporary rule will expire on
December 31, 2011.
As described in detail below, Form MA-T will require a municipal
advisor to indicate the purpose for which it is submitting the form
(i.e., initial application for, or amendment or withdrawal of temporary
registration), provide certain basic identifying and contact
information concerning its business, indicate the nature of its
municipal advisory activities, and supply information about its
disciplinary history and the disciplinary history of its associated
municipal advisor professionals. The Commission carefully considered
alternatives to the adoption of an interim final temporary rule before
deciding to adopt Rule 15Ba2-6T. It considered, for example, whether it
would be preferable to issue a broad-based exemption from the Dodd-
Frank Act's registration requirement \12\ in order to allow the
Commission time to consider a final permanent registration program
before municipal advisors would be required to submit any registration
form. In light of the October 1, 2010 effective date that Congress set
for Section 975 of the Dodd-Frank Act, delaying implementation of any
registration for municipal advisors and not accommodating temporary
registration would not appear to achieve the purposes intended by
Congress in selecting an October 1, 2010 registration date.
---------------------------------------------------------------------------
\12\ See Section 15B(a)(4) of the Exchange Act, as amended by
Section 975(a)(4) of the Dodd-Frank Act.
---------------------------------------------------------------------------
The Commission also considered and weighed the relative costs and
benefits of requiring disciplinary information in the context of the
temporary registration contemplated by Form MA-T. The Commission has
determined to require disclosure of disciplinary information on Form
MA-T because of the value it will have for the Commission's oversight
of municipal advisors and their activities in the municipal securities
market, and because of the importance of such disciplinary information
to investors, issuers and others in choosing a municipal advisor,
engaging in transactions with a municipal advisor, or participating in
transactions in municipal securities issued in offerings for which a
municipal advisor provided municipal advisory services.
The Commission believes that providing a temporary registration
process for municipal advisors, pursuant to an interim final temporary
rule effective on October 1, 2010, is a necessary and appropriate way
to proceed, is consistent with the intent of Congress in enacting
Section 975, and is a tailored way to provide investors and municipal
entities with basic and important information quickly while the
Commission considers a permanent registration program. The Commission
requests comment generally on the decision to require temporary
registration on Form MA-T and the specific information required to be
reported on the form. The Commission also requests comment on the
Commission's determinations discussed above and on whether there are
alternatives not discussed above that the Commission should consider.
A. Definition of Municipal Advisor
Section 15B(e) of the Exchange Act, as amended by Section 975(e) of
the Dodd-Frank Act, defines the term ``municipal advisor'' to mean a
person (who is not a municipal entity or an employee of a municipal
entity) (1) that provides advice to or on behalf of a municipal entity
\13\ or obligated person \14\ with respect to municipal financial
products \15\ or the issuance of municipal securities,\16\ including
advice with
[[Page 54467]]
respect to the structure, timing, terms, and other similar matters
concerning such financial products or issues, or (2) that undertakes a
solicitation \17\ of a municipal entity. The definition specifically
includes ``financial advisors, guaranteed investment contract brokers,
third-party marketers, placement agents, solicitors, finders, and swap
advisors'' that provide municipal advisory services.\18\ The definition
of ``municipal advisor'' explicitly excludes a broker, dealer, or
municipal securities dealer serving as an underwriter,\19\ as well as
attorneys offering legal advice or providing services that are of a
traditional legal nature and engineers providing engineering advice are
also excluded.\20\
---------------------------------------------------------------------------
\13\ ``Municipal entity'' is defined to mean any State,
political subdivision of a State, or municipal corporate
instrumentality of a State, including: Any agency, authority, or
instrumentality of the State, political subdivision, or municipal
corporate instrumentality; any plan, program, or pool of assets
sponsored or established by the State, political subdivision, or
municipal corporate instrumentality or any agency, authority, or
instrumentality thereof; and any other issuer of municipal
securities. See Section 15B(e) of the Exchange Act, as amended by
Section 975(e) of the Dodd-Frank Act.
\14\ ``Obligated person'' is defined to mean any person,
including an issuer of municipal securities, who is either generally
or through an enterprise, fund, or account of such person, committed
by contract or other arrangement to support the payment of all or
part of the obligations on the municipal securities to be sold in an
offering of municipal securities. See id.
\15\ ``Municipal financial product'' is defined to mean
municipal derivatives, guaranteed investment contracts, and
investment strategies. ``Investment strategies'' includes plans or
programs for the investment of the proceeds of municipal securities
that are not municipal derivatives, guaranteed investment contracts,
and the recommendation of and brokerage of municipal escrow
investments. See id.
\16\ The statute specifically includes within the meaning of
municipal advisor, someone who provides advice with respect to the
structure, timing, terms, and other similar matters concerning
municipal financial products or issues. See id.
\17\ ``Solicitation of a municipal entity or obligated person''
is defined to mean a direct or indirect communication with a
municipal entity or obligated person made by a person, for direct or
indirect compensation, on behalf of a broker, dealer, municipal
securities dealer, municipal advisor, or investment adviser (as
defined in Section 202 of the Investment Advisers Act of 1940, 15
U.S.C. 80b-2) that does not control, is not controlled by, or is not
under common control with the person undertaking such solicitation
for the purpose of obtaining or retaining an engagement by a
municipal entity or obligated person of a broker, dealer, municipal
securities dealer, or municipal advisor for or in connection with
municipal financial products, the issuance of municipal securities,
or of an investment adviser to provide investment advisory services
to or on behalf of a municipal entity. See id.
\18\ These entities, however, are only included if they provide
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 undertake a solicitation of a
municipal entity. See Section 975(e) of the Dodd-Frank Act. The term
``municipal advisory services'' as used herein means advice with
respect to municipal financial products, the issuance of municipal
securities, and the solicitation of a municipal entity.
\19\ The term ``underwriter'' is defined in Section 2(a)(11) of
the Securities Act of 1933. 15 U.S.C. 77b(a)(11). A broker, dealer
or municipal securities dealer who provides municipal advisory
services while acting in a capacity other than as an underwriter
would, however, be a municipal advisor.
\20\ Id.
---------------------------------------------------------------------------
The Dodd-Frank Act also excludes from the definition ``any
investment adviser registered under the Investment Advisers Act of
1940, or persons associated with such investment advisers who are
providing investment advice.'' \21\ The Commission interprets this
exclusion 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 the investment adviser or
associated person of the adviser provides municipal advisory services,
so long as those services are investment advice for purposes of the
Investment Advisers Act. A registered investment adviser or an
associated person of a registered investment adviser must register with
the Commission as a municipal advisor if the adviser or associated
person of an adviser provides any municipal advisory services other
than investment advice within the meaning of the Investment Advisers
Act.\22\
---------------------------------------------------------------------------
\21\ See Section 975(e) of the Dodd-Frank Act.
\22\ The Commission believes that such interpretation is in
furtherance of the goals of the Dodd-Frank Act to regulate municipal
advisors, a category of persons previously unregulated.
---------------------------------------------------------------------------
The Commission similarly interprets the exclusion in the Dodd-Frank
Act of ``any commodity trading advisor registered under the Commodity
Exchange Act or persons associated with a commodity trading advisor who
are providing advice related to swaps.'' Accordingly, a commodity
trading advisor or any person associated with a commodity trading
advisor is excluded from the definition of ``municipal advisor'' if the
commodity trading advisor or associated person of the commodity trading
advisor provides municipal advisory services, so long as those services
are advice related to swaps. A commodity trading advisor or an
associated person of a commodity trading advisor must register with the
Commission as a municipal advisor if the commodity trading advisor or
an associated person of a commodity trading advisor provides any
municipal advisory services that are not advice related to swaps.
B. Temporary Registration on Form MA-T
Pursuant to new Rule 15Ba2-6T, as of October 1, 2010, in order
temporarily to satisfy the new registration requirement for municipal
advisors, and thereby legally be permitted to perform, or continue to
perform, municipal advisory services, a municipal advisor will need to
have completed and submitted new Form MA-T through the Commission's Web
site at https://www.sec.gov by October 1, 2010. Because entry of
information into Form MA-T will require the securing of access
credentials, as explained in more detail below, municipal advisors are
advised to allow ample time to establish an account and obtain access
credentials (username and password) and complete the form by October 1,
2010. Form MA-T will require a municipal advisor to indicate the
purpose for which it is submitting the form (i.e., initial temporary
registration, amendment to temporary registration, or withdrawal from
temporary registration), provide certain basic identifying and contact
information concerning its business, indicate the nature of its
municipal advisory activities, and supply information about its
disciplinary history and the disciplinary history of its associated
municipal advisor professionals.\23\
---------------------------------------------------------------------------
\23\ Every temporary registration and each amendment to a
temporary registration or withdrawal from temporary registration
filed pursuant to the rule shall constitute a ``report'' within the
meaning of Sections 15B(c), 17(a), 18(a) and 32(a) and other
applicable provisions of the Exchange Act. See Rule 15Ba2-6T(c). As
a consequence, it would be unlawful for a municipal advisor to
willfully make or cause to be made, a false or misleading statement
of a material fact or omit to State a material fact in the Form MA-
T.
---------------------------------------------------------------------------
More specifically, the information to be supplied will include:
Basic Information
1. Purpose for submission of Form MA-T. A municipal advisor must
indicate whether it is submitting the form for initial temporary
registration as a municipal advisor, is submitting an amendment to a
temporary registration as a municipal advisor, or is submitting a
withdrawal from temporary registration as a municipal advisor. If the
municipal advisor is submitting an amendment or withdrawing from
temporary registration, it will also be necessary to provide the
Municipal Advisor Registration Number assigned to the municipal advisor
at the time of its initial temporary registration. This information is
needed in order to determine the purpose for which Form MA-T is being
submitted and to appropriately cross-reference amendments and
withdrawals to the original temporary registration. The inclusion of
these items will allow the same form, Form MA-T, to be used for
multiple purposes: Initial temporary registration, amendments to
temporary registrations and withdrawals from temporary registration.
The Commission seeks comment on the use of Form MA-T for these
three purposes, whether use of the same form for multiple purposes may
be confusing for registrants, and whether it would be preferable to
have a separate form for each of these purposes. Will these
requirements be confusing or otherwise difficult for a municipal
advisor to comply with?
2. Identifying and contact information. A municipal advisor must
indicate the full legal name of the municipal advisor and, if
different, the name under which it conducts its business, the address
of its principal office and place of business, the telephone number and
the facsimile number, if any, at that location, and its
[[Page 54468]]
general e-mail address and Web site, if any. In addition, the municipal
advisor must supply its mailing address, if it is different from its
principal office and place of business, as well as the name and title
of a person whom the municipal advisor has authorized to receive
information and respond to questions about the registration (the
``contact person'') and the address, telephone number and facsimile
number, if any, and e-mail address, if any, of the contact person.
The Commission is requesting this identifying and contact
information to determine whether a particular municipal advisor has
submitted a temporary registration, to contact a person at the
municipal advisor if Commission staff have any questions or wish to
arrange for an inspection, and to send information to the municipal
advisor.
The Commission requests comment concerning the appropriateness of
requiring this identifying and contact information, including whether
additional information should be required or whether different
information would be better suited for this purpose. In particular,
might it be confusing or otherwise difficult for a municipal advisor to
supply this information?
3. Other regulatory identifying information. Form MA-T also
requires a municipal advisor to provide its Employer Identification
Number (used with respect to Internal Revenue Service matters), but
not--in the case of a sole proprietor, for example--a Social Security
Number. If the municipal advisor is also registered with the Commission
as an investment adviser, broker, dealer, or municipal securities
dealer, it will be required to provide its related SEC file number or
numbers. In addition, if the municipal advisor has a number (a ``CRD
Number'') assigned to it either under the Financial Industry Regulatory
Authority's (``FINRA'') Central Registration Depositary (``CRD'')
system or the Investment Adviser Registration Depository (``IARD'')
system, it will be required to provide its CRD Number.
The Commission seeks this information to more effectively cross-
reference those entities registered as municipal advisors to those who
are registered as brokers, dealers, municipal securities dealers or
investment advisers. This ability to cross-reference will allow the
Commission to assemble more complete information concerning a municipal
advisor who is also registered as a broker, dealer, municipal
securities dealer or investment adviser and to plan for and carry out
efficient and effective examinations of such entities.\24\ In addition,
by obtaining all of a registrant's regulatory file numbers, the
Commission will be able to cross-reference disciplinary information
that is submitted to the CRD or IARD systems with that submitted on
Form MA-T.
---------------------------------------------------------------------------
\24\ See 15 U.S.C. 78o-4(c)(7).
---------------------------------------------------------------------------
The Commission seeks comment concerning the requirement to supply
SEC file numbers and CRD Numbers. Will this requirement be confusing or
otherwise difficult for a municipal advisor to comply with? Would the
use of other identifying numbers be more useful or appropriate or
should no identifying numbers be required?
Nature of Municipal Advisory Activities
Form MA-T requires the municipal advisor to indicate the general
types of municipal advisory services that it provides. The following
eight activities are listed, together with a checkbox for each: (1)
Advice concerning the issuance of municipal securities, (2) advice
concerning the investment of the proceeds of municipal securities, (3)
advice concerning guaranteed investment contracts, (4) recommendation
and/or brokerage of municipal escrow investments, (5) advice concerning
the use of municipal derivatives (e.g., swaps), (6) solicitation of
business from a municipal entity or obligated person for an
unaffiliated person or firm (e.g., third party marketers, placement
agents, solicitors and finders), (7) preparation of feasibility
studies, tax or revenue projections, or similar products in connection
with offerings or potential offerings of municipal securities, and (8)
other. Registrants who check ``other'' activities will be required to
provide a narrative description of such activities. Activities one to
six above are derived from the definition of municipal advisor in the
Dodd-Frank Act.\25\ Activity number seven above (the preparation of
feasibility studies, tax or revenue projections, or similar products in
connection with offerings or potential offerings of municipal
securities) was included because these services are sometimes provided
by financial advisors (some of whom may be municipal advisors) to
municipal entities. This information, together with information under
item eight (other), will assist the Commission in understanding the
scope of activities in which a municipal advisor engages.
---------------------------------------------------------------------------
\25\ See Section 15B(e)(4) of the Exchange Act as added by
Section 975(e)(4) of the Dodd-Frank Act.
---------------------------------------------------------------------------
The Commission is seeking this information in order to better
understand the activities of municipal advisors. This information is
necessary to understand the basis for registration and will assist
Commission staff to better plan and prepare for inspections and
examinations \26\ of municipal advisors.
---------------------------------------------------------------------------
\26\ See Section 17(a)(1) of the Exchange Act, as amended by
Section 975(h) of the Dodd-Frank Act.
---------------------------------------------------------------------------
The Commission seeks comment concerning the requirement for a
municipal advisor to supply information in Form MA-T concerning the
general types of municipal advisory services it provides. In
particular, will it be confusing or otherwise difficult for a municipal
advisor to provide this information? Are the categories of municipal
advisory services appropriate or should additional or other categories
be included? Are there considerations relating to the business of
municipal advisors, or of some types of municipal advisors, that the
Commission may not have taken into account in connection with this list
of municipal advisory services?
Disciplinary Matters
Section 975 of the Dodd-Frank Act amended section 15B of the
Exchange Act to direct the Commission, by order, to censure, place
limitations on the activities, functions, or operations, suspend for a
period not exceeding twelve months, or revoke the registration of any
municipal advisor, if it finds \27\ that such municipal advisor has
committed or omitted any act, or is subject to an order or finding,
enumerated in subparagraph (A),\28\ (D),\29\ (E),\30\ (H),\31\ or (G)
\32\ of paragraph (4) of section 15(b) of the Exchange Act; has been
convicted of any offense specified Section 15(b)(4)(B) \33\ of the
Exchange Act within ten years of the commencement of the proceedings
under section 15(c); or is enjoined from any action, conduct, or
practice specified in Section 15(b)(4)(C) \34\ of the Exchange Act.\35\
Item 3 of Form MA-T includes questions intended to solicit information
from a municipal advisor concerning any of its activities or
[[Page 54469]]
activities of certain of its associated persons that could subject the
municipal advisor to disciplinary actions by the Commission under such
subparagraphs of Section 15(b)(4) of the Exchange Act.
---------------------------------------------------------------------------
\27\ Such findings must be on the record after notice and
opportunity for hearing and include a finding that the particular
disciplinary action is in the public interest. See Section 15B(c)(2)
of the Exchange Act, as amended by Section 975(c)(3) of the Dodd-
Frank Act. See also 17 CFR 201.
\28\ See 15 U.S.C. 78o(b)(4)(A).
\29\ See 15 U.S.C. 78o(b)(4)(D).
\30\ See 15 U.S.C. 78o(b)(4)(E).
\31\ See 15 U.S.C. 78o(b)(4)(H).
\32\ See 15 U.S.C. 78o(b)(4)(G).
\33\ See 15 U.S.C. 78o(b)(4)(B).
\34\ See 15 U.S.C. 78o(b)(4)(C).
\35\ The Commission has the same authority with respect to
municipal securities dealers. See 15 U.S.C. 78o-4(c).
---------------------------------------------------------------------------
In addition to its value generally for the Commission's oversight
of the municipal securities markets, the Commission seeks this
information because it may indicate that a municipal advisor could be
statutorily disqualified from acting as a municipal advisor.\36\ In
addition, the Commission wishes to make this important information
available to municipal entities and obligated persons who engage
municipal advisors and to investors who may purchase securities from
offerings in which municipal advisors participated.
---------------------------------------------------------------------------
\36\ See id.
---------------------------------------------------------------------------
The disciplinary information to be disclosed is substantially
similar to the information required to be disclosed in Form BD for
broker-dealers.\37\ Specifically, Form MA-T asks questions concerning
the disciplinary history of the municipal advisor and of its associated
municipal advisor professionals. The Commission defines the term
``associated municipal advisor professional'' in the glossary section
of Form MA-T to mean: (A) Any associated person of a municipal advisor
primarily engaged in municipal advisory activities; (B) any associated
person of a municipal advisor who is engaged in the solicitation of
municipal entities or obligated persons; (C) any associated person who
is a supervisor of any persons described in subparagraphs (A) or (B);
(D) any associated person who is a supervisor of any person described
in subparagraph (C) up through and including, the Chief Executive
Officer or similarly situated official designated as responsible for
the day-to-day conduct of the municipal advisor's municipal advisory
activities; and (E) any associated person who is a member of the
executive or management committee of the municipal advisor or a
similarly situated official, if any; and excludes any associated person
whose functions are solely clerical or ministerial. The definition of
associated municipal finance professional is derived from the
definition of ``municipal finance professional'' set forth in Rule G-37
of the Municipal Securities Rulemaking Board.
---------------------------------------------------------------------------
\37\ 17 CFR 249.501.
---------------------------------------------------------------------------
The Commission has chosen to limit this inquiry to a subgroup
(associated municipal advisor professionals) for purposes of temporary
registration in order to obtain information about those associated
persons \38\ who are closely associated with an advisor's municipal
advisory activities, i.e., those who are primarily engaged in an
advisor's municipal advisory activities, have supervisory
responsibilities over those primarily engaged in municipal advisory
activities, are engaged in day-to-day management of the conduct of an
advisor's municipal advisory activities, or are responsible for
executive management of the advisor. The Commission believes this is an
appropriate definition to use for purposes of temporary registration
because it will allow the Commission to obtain, and municipal entities,
obligated persons and investors to have access to, information about
those persons who may be most relevant to an advisor's municipal
advisory services, while excluding information about persons at a firm
whose activities may have less bearing on the provision of such
services.
---------------------------------------------------------------------------
\38\ Section 15B(e)(7) of the Exchange Act, added by Section
975(e) of the Dodd-Frank Act, defines ``associated person of a
municipal advisor'' as any partner, officer, director, or branch
manager of a municipal advisor (or any person occupying a similar
status or performing similar functions); any other employee of a
municipal advisor who is engaged in the management, direction,
supervision, or performance of any activities relating to the
provision of advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial products or the
issuance of municipal securities; and any person directly or
indirectly controlling, controlled by, or under common control with
a municipal advisor, or an employee of a municipal advisor.
---------------------------------------------------------------------------
The Commission seeks comment concerning whether this limitation is
appropriate, whether it excludes persons whose disciplinary history may
be relevant to a municipal advisor's activities, or whether it includes
persons whose disciplinary history is not sufficiently relevant to a
municipal advisor's activities to warrant disclosure. In addition, the
Commission solicits specific suggestions as to how the disclosure
regarding associated persons whose actions are covered by Item 3 of
Form MA-T might be improved for purposes of a permanent registration
program or whether the current limitation to associated municipal
advisory professionals is suitable.
In addition, the Commission notes that the time-period limits for
disclosure on Form MA-T are consistent with the disclosure reporting
requirements on Form BD, adopted pursuant to Section 15(b)(4) of the
Exchange Act. Specifically, with respect to felonies and misdemeanors
involving investments or an investment-related business, Form MA-T
requires disclosures of matters within the last ten years. With respect
to whether the municipal advisor or any associated municipal advisor
professional was enjoined by any domestic or foreign court in
connection with any investment-related activity, Form MA-T similarly
requires disclosures of matters within the last ten years. Disclosure
is also required concerning any orders entered against the municipal
advisor or any associated municipal advisor professional by any Federal
or State regulatory agency other than the SEC and Commodity Futures
Trading Commission (``CFTC'') \39\ or by any foreign financial
regulatory authority within the last ten years.
---------------------------------------------------------------------------
\39\ With regard to the orders entered by SEC and CFTC, no time
limit is placed on disclosure. See infra Item 3(d).
---------------------------------------------------------------------------
With respect to all other matters identified on Form MA-T
(including Federal, State, and foreign regulatory actions and actions
taken by self-regulatory organizations), no time limit is placed on
disclosure. The Commission believes that it is important to collect
information about matters within these timeframes because, under the
Exchange Act, the Commission could use such matters to form the basis
for an action to suspend or revoke a municipal advisor's
registration.\40\
---------------------------------------------------------------------------
\40\ See Section 15B(c)(2) of the Exchange Act.
---------------------------------------------------------------------------
The Commission seeks comment concerning these timeframes in
connection with temporary registration of municipal advisors. Would the
public and municipal entities find the full history of disciplinary
information important and useful? Are these timeframes too long, such
that they require disclosure of information that is no longer useful,
or such that they impose an undue burden on applicants for temporary
registration?
More specifically, Form MA-T asks the following, which are, in
substance, the same as the disciplinary questions asked in Form BD:
1. Whether, in the past ten years, the municipal advisor or any
associated municipal advisor professional has been convicted of or pled
guilty or nolo contendere (``no contest'') in a domestic, foreign, or
military court to any felony or been charged \41\ with any felony?
---------------------------------------------------------------------------
\41\ The Commission notes that a municipal advisor only needs to
report charges that are currently pending.
---------------------------------------------------------------------------
2. Whether in the past ten years, the municipal advisor or any
associated municipal advisor professional has been convicted of or pled
guilty or nolo contendere (``no contest'') in a domestic, foreign, or
military court to a misdemeanor involving: Investments or an
investment-related business, or any fraud, false statements, or
omissions,
[[Page 54470]]
wrongful taking of property, bribery, perjury, forgery, counterfeiting,
extortion, or a conspiracy to commit any of these offenses or has been
charged \42\ with a misdemeanor involving such actions?
---------------------------------------------------------------------------
\42\ The Commission notes that a municipal advisor only needs to
report charges that are currently pending.
---------------------------------------------------------------------------
3. Whether the SEC or the CFTC has ever: (a) Found the municipal
advisor or any associated municipal advisor professional to have made a
false statement or omission, (b) found the municipal advisor or any
associated municipal advisor professional to have been involved in a
violation of its regulations or statutes, (c) found the municipal
advisor or any associated municipal advisor professional to have been a
cause of an investment-related business having its authorization to do
business denied, suspended, revoked, or restricted, (d) entered an
order against the municipal advisor or any associated municipal advisor
professional in connection with investment-related activity, or (e)
imposed a civil money penalty on the municipal advisor or any
associated municipal advisor professional, or ordered the municipal
advisor or any associated municipal advisor professional to cease and
desist from any activity.
4. Whether any other Federal regulatory agency, any State
regulatory agency, or any foreign financial regulatory authority has
(a) Ever found the municipal advisor or any associated municipal
advisor professional to have made a false statement or omission, or
been dishonest, unfair, or unethical, (b) ever found the municipal
advisor or any associated municipal advisor professional to have been
involved in a violation of investment-related regulations or statutes,
(c) ever found the municipal advisor or any associated municipal
advisor professional to have been a cause of an investment-related
business having its authorization to do business denied, suspended,
revoked, or restricted, (d) in the past ten years, entered an order
against the municipal advisor or any associated municipal advisor
professional in connection with an investment-related activity, or (e)
ever denied, suspended, or revoked the municipal advisor's or any
associated municipal advisor professional's registration or license, or
otherwise prevented the municipal advisor or any associated municipal
advisor professional, by order, from associating with an investment-
related business or restricted the municipal advisor's or any
associated municipal advisor professional's activity.
5. Whether any self-regulatory organization or commodities exchange
has ever (a) found the municipal advisor or any associated municipal
advisor professional to have made a false statement or omission, (b)
found the municipal advisor or any associated municipal advisor
professional to have been involved in a violation of its rules (other
than a violation designated as a ``minor rule violation'' under a plan
approved by the SEC), (c) found the municipal advisor or any associated
municipal advisor professional to have been the cause of an investment-
related business having its authorization to do business denied,
suspended, revoked, or restricted, or (d) disciplined the municipal
advisor or any associated municipal advisor professional by expelling
or suspending it from membership, barring or suspending its association
with other members, or otherwise restricting its activities.
6. Whether the municipal advisor's or any associated municipal
advisor professional's authorization to act as an attorney, accountant,
or Federal contractor has ever been revoked or suspended.
7. Whether the municipal advisor or any associated municipal
advisor professional is now the subject of any regulatory proceeding
that could result in a ``yes'' answer to any part of the questions
described in 3, 4 or 5 above.
8. Whether any domestic or foreign court has: (a) In the last ten
years, enjoined the municipal advisor or any associated municipal
advisor professional in connection with any investment-related
activity, (b) ever found that the municipal advisor or any associated
municipal advisor professional was involved in a violation of
investment-related statutes or regulations, or (c) ever dismissed,
pursuant to a settlement agreement, an investment-related civil action
brought against the municipal advisor or any associated municipal
advisor professional by a State or foreign financial regulatory
authority?
9. Whether the municipal advisor or any associated municipal
advisor professional is now the subject of any civil proceeding that
could result in a ``yes'' answer to any part of question 8 above.
If a municipal advisor answers ``yes'' to any of these questions, a
text box will require a brief narrative of the event or a cross-
reference to disclosure of the event made through the broker-dealer or
investment advisor public disclosure systems.
The Commission requests comments on all aspects of these
disciplinary questions, including their appropriateness and adequacy,
whether there are additional or other questions that should be
included, and whether they will impose an excessive burden on municipal
advisors to answer. In addition, the Commission requests comment
concerning whether including the disciplinary questions in Form MA-T
will impose undue hardship on, or have other consequences for, small
municipal advisors. Furthermore, comment is solicited as to whether the
ability to cross-reference to disciplinary disclosures on Form BD and
Form ADV for investment advisers \43\ will make it more difficult for
municipal entities, obligated persons, investors and others to obtain
this information than if it were included in Form MA-T itself. In
addition, will the ability of municipal advisors to cross-reference
such disclosures on Forms BD and ADV significantly reduce the burden on
municipal advisors, and particularly small advisors, to complete Form
MA-T?
---------------------------------------------------------------------------
\43\ 17 CFR 279.1.
---------------------------------------------------------------------------
Execution
With respect to execution of Form MA-T, the person who signs the
form will be required to depose and say that he or she has executed the
form on behalf of the municipal advisor and with its authority. With
this execution, both the person who signs the form and the municipal
advisor must represent that the information and statements made in Form
MA-T are current, true and complete. The municipal advisor also will be
required to consent to service of any civil action or notice of any
proceeding before the Commission or self-regulatory organization
regarding its advisory services via registered or certified mail to its
named contact person. This is consistent with the execution provisions
of Forms BD and ADV, but deletes references to State registration,
bonding requirements and other inapplicable components.
The individual who signs the Form MA-T depends upon the form of
organization of the municipal advisor:
For a sole proprietorship, the sole proprietor should
sign.
For a partnership, a general partner should sign.
For a corporation, an authorized principal officer should
sign.
For all others, an authorized individual who participates
in managing or directing the municipal advisor's affairs should sign.
The Commission requests comment concerning the representations
required of a person who executes Form MA-T,
[[Page 54471]]
such as whether there should be additional or alternative
representations. In addition, the Commission solicits comment regarding
the requirement that the municipal advisor submit to service of process
in the manner described. Would there be alternative methods to obtain
such consent or should such consent not be obtained?
Amendment, Withdrawal, and Rescission
Rule 15Ba2-6T requires that a municipal advisor promptly amend
Sections 1 or 3 of Form MA-T if the information therein becomes
inaccurate in any way and whenever a municipal advisor wishes to
withdraw from registration. A municipal advisor can amend its Form MA-T
on the Commission's Web site by accessing Form MA-T and checking the
box in Item 1 for an amendment and providing updated information in the
relevant sections of the form. Similarly, a municipal advisor can
withdraw its registration by accessing Form MA-T on the Commission's
Web site and by checking the box for withdrawal on the form. In
addition, pursuant to Rule 15Ba2-6T, the Commission may rescind a
municipal advisors' temporary registration following notice and hearing
in accordance with the Commission's Rules of Practice.\44\
---------------------------------------------------------------------------
\44\ See supra note 23.
---------------------------------------------------------------------------
Instructions and Glossary
Form MA-T includes a set of instructions for its proper completion
and submission, and a glossary of terms intended, in part, to help
participants in the municipal securities industry in determining
whether they are municipal advisors and thus required to register.
These instructions and glossary are attached to this release, together
with Form MA-T. The definitions in the glossary (except for the
definition of associated municipal advisor professional discussed above
\45\) are derived from Form ADV and the terms in the Exchange Act,
including Section 975(e) of the Dodd-Frank Act.\46\ The instructions
are intended to answer basic questions concerning completion of the
form. Comments are requested on all aspects of the form, instructions
and glossary. For example, comments are solicited concerning whether
the definitions and instructions are clear and useful to a submitter
and how they might be improved. In addition, comments are solicited
concerning whether additional instructions or definitions would be
useful.
---------------------------------------------------------------------------
\45\ See supra text accompanying notes 37-38.
\46\ The following definitions in the glossary were taken from
Form ADV (17 CFR 279.1): ``Affiliate,'' ``Charged,'' ``Control,''
``Employee,'' ``Enjoined,'' ``Felony,'' ``FINRA CRD or CRD,''
``Foreign Financial Regulatory Authority,'' ``Found,'' ``Investment-
Related,'' ``Involved,'' ``Minor Rule Violation,'' ``Misdemeanor,''
``Order,'' ``Person,'' ``Principal Place of Business or Principal
Office and Place of Business,'' ``Proceeding,'' ``Related Person,''
and ``Self-Regulatory Organization or SRO.'' The Commission believes
that it is appropriate to conform the definitions for these terms in
Form MA-T to the definitions used in Form ADV because the
information sought will be used for similar purposes. In addition,
inconsistency in the definitions could create unnecessary
uncertainty and confusion for municipal advisors, some of whom also
must file Form ADV. The following definitions in the glossary were
taken from the Section 975(e) of the Dodd-Frank Act: ``Associated
Person of a Municipal Advisor,'' ``Guaranteed Investment Contract,''
``Investment Strategies,'' ``Municipal Advisor,'' ``Municipal
Entity,'' ``Municipal Financial Product,'' ``Obligated Person,'' and
``Solicitation of a Municipal Entity or Obligated Person.'' ``IARD''
is a FINRA definition. See supra text accompanying notes 37-38 for
the definition of ``associated municipal advisor professional.''
---------------------------------------------------------------------------
Timing Issues
As noted above, current municipal advisors are required by statute
to register with the Commission by October 1, 2010. Municipal advisors
are advised to allow ample time to establish an account and obtain
access credentials (username and password) and complete the on-line
version of Form MA-T by the statutory deadline.
In order to establish an account and obtain access credentials to
the temporary registration system for filing Form MA-T on the
Commission's secure Web site, a submitter will need to fill out general
user information fields such as name, address, phone number, e-mail
address, organization name and employer identification number, and user
account information (i.e., username and password), and to select and
answer a security question. Once accepted by the temporary registration
system, the submitter will receive an e-mail notification that the
account has been established and the submitter will be able to access
and complete Form MA-T. The Commission anticipates that submitters will
ordinarily obtain access credentials the same day that they are
requested. To avoid the possibility of delay, municipal advisors are
encouraged to allow ample time to establish an account and obtain
access credentials and submit Form MA-T before October 1, 2010.
Form MA-T will be accessible through a link located on the
Commission's Web site, https://www.sec.gov, beginning on or about
September 1, 2010, at which time municipal advisors will be able to
submit forms for temporary registration and to amend and withdraw such
registrations through the Commission's Web site. Each Form MA-T,
including each amendment to a temporary registration or withdrawal from
temporary registration, is considered filed with the Commission upon
its completion on the Commission Web page established for that purpose
and the Commission has sent confirmation that the form was filed to the
municipal advisor.
A municipal advisor that completes the temporary registration form
and receives confirmation from the Commission that the form was filed
will be temporarily registered for purposes of Section 15B \47\ until
the earlier of: (1) The date that the municipal advisor's registration
is approved or disapproved by the Commission pursuant to a final rule
adopted by the Commission establishing another manner of registration
of municipal advisors and prescribing a form for such purpose; \48\ (2)
the date on which the municipal advisor's temporary registration is
rescinded by the Commission; or (3) the expiration of the interim final
temporary rule on December 31, 2011. Comment is requested concerning
the December 31, 2011 expiration date; would an earlier or later date
be more appropriate?
---------------------------------------------------------------------------
\47\ See supra note 9.
\48\ Approval of a municipal advisor's registration under the
final permanent rule will replace and supersede a temporary
registration.
---------------------------------------------------------------------------
III. Other Matters
The Administrative Procedure Act generally requires an agency to
publish notice of a proposed rulemaking in the Federal Register.\49\
This requirement does not apply, however, if the agency ``for good
cause finds * * * that notice and public procedure are impracticable,
unnecessary, or contrary to the public interest.'' \50\ Further, the
Administrative Procedure Act also generally requires that an agency
publish an adopted rule in the Federal Register 30 days before it
becomes effective.\51\ This requirement does not apply, however, if the
agency finds good cause for making the rule effective sooner.\52\ The
Commission finds, for good cause, that notice and solicitation of
comment before adopting the new rules are impracticable, unnecessary,
or contrary to the public interest.
---------------------------------------------------------------------------
\49\ See 5 U.S.C. 553(b).
\50\ See id.
\51\ See 5 U.S.C. 553(d).
\52\ See id.
---------------------------------------------------------------------------
For the reasons discussed throughout this release, the Commission
finds good cause to act immediately to adopt these rules on an interim
final temporary basis. The Dodd-Frank Act amended Section 15B(a)(2) of
the Exchange Act to
[[Page 54472]]
provide that, effective on October 1, 2010, ``[i]t shall be unlawful
for a municipal advisor to provide advice to or on behalf of a
municipal entity or obligated person with respect to municipal
financial products or the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or obligated person,
unless the municipal advisor is registered * * *'' with the
Commission.\53\ The Commission is adopting an interim final temporary
rule in order to allow municipal advisors temporarily to satisfy the
registration requirement in order that they may continue to act as
municipal advisors on and after October 1, 2010. Absent such means to
register, municipal advisors would likely have to cease providing all
municipal advisory services, which may have a significant adverse
impact on their businesses and on municipal entities and obligated
persons engaged in issuing municipal securities or other activities for
which they obtain the advice of a municipal advisor. Some municipal
entities and obligated persons do not access the capital markets
frequently and depend heavily on their municipal advisors in connection
with offerings of municipal securities. In addition, some municipal
entities and obligated persons, such as large or frequent issuers,
often have complex financial plans and large borrowing needs and use
municipal advisors to supply independent, expert advice concerning long
term financial planning and the use of swaps and other sophisticated
financial products. The interim final temporary rule is designed to
provide a method by which municipal advisors may continue to provide
municipal advisory services to municipal entities and obligated persons
without violating Section 15B(a)(2) of the Exchange Act.
---------------------------------------------------------------------------
\53\ See Section 975(a) of the Dodd-Frank Act.
---------------------------------------------------------------------------
The Commission is requesting comments on the interim final
temporary rule and will carefully consider any comments received and
respond to them as necessary or appropriate. The interim final
temporary rule will expire on December 31, 2011. Setting a termination
date for the interim final temporary rule will necessitate further
Commission action no later than the end of that period. The Commission
finds that there is good cause to have the rule effective as an interim
final temporary rule on October 1, 2010, and that notice and public
procedure in advance of effectiveness of the interim final temporary
rule are impracticable, unnecessary and contrary to the public
interest.\54\
---------------------------------------------------------------------------
\54\ This finding also satisfies the requirements of 5 U.S.C.
808(2), allowing the rule and form to become effective
notwithstanding the requirement of 5 U.S.C. 801 (if a Federal agency
finds that the notice and public comment are ``impracticable,
unnecessary or contrary to the public interest,'' a rule ``shall
take effect at such time as the Federal agency promulgating the rule
determines'').
---------------------------------------------------------------------------
IV. Paperwork Reduction Act
A. Background
Rule 15Ba2-6T and Form MA-T contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``Paperwork Reduction Act'' or ``PRA'').\55\ The title for the
collection of information is ``Temporary Registration of Municipal
Advisors--Form MA-T'' and the OMB control number for the collection of
information is 3235-0659.
---------------------------------------------------------------------------
\55\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
The Commission has submitted these requirements to the Office of
Management and Budget (``OMB'') for review and approval in accordance
with 44 U.S.C. 3507(j) and 5 CFR 1320.13. Separately, the Commission
has submitted the collection of information to OMB for review and
approval in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. OMB
has approved the collection of information related to Form MA-T on an
emergency basis with an expiration date of March 31, 2011.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. As discussed above, Section 15B of
the Exchange Act, as amended by the Dodd-Frank Act, requires municipal
advisors (as defined in Section 975 of the Dodd-Frank Act) to register
with the Commission by October 1, 2010.\56\ As a transitional step to
the implementation of a final permanent registration program, the
Commission is today adopting, on an interim final basis, new Rule
15Ba2-6T, which will permit municipal advisors to temporarily satisfy
the registration requirement.
---------------------------------------------------------------------------
\56\ See paragraphs (a) and (i) of Section 975 of the Dodd-Frank
Act.
---------------------------------------------------------------------------
Rule 15Ba2-6T and Form MA-T will require a municipal advisor to:
Provide, in Item 1 of Form MA-T, basic identifying
information, including name; address; telephone number; e-mail address;
fax number and Web site address, if any; and Employer Identification
Number (but not Social Security Number, in the case, for example, of a
sole proprietor). If the municipal advisor is also registered with the
Commission as an investment adviser, broker, dealer, or municipal
securities dealer, it will be required to provide its Commission file
number(s), and will be required to provide its CRD number under FINRA's
CRD system or under IARD, if it has one;
Indicate, in Item 2 of Form MA-T, what type of municipal
advisory services it provides by checking one or more of seven
activities listed on Form MA-T and/or by describing any other
activities; and
Answer ``Yes'' or ``No'' in Item 3 of Form MA-T to
approximately 24 questions concerning any convictions of--or any guilty
or nolo contendere pleas by--the municipal advisor or any of its
associated municipal advisor professionals in a felony case over the
last ten years, and any pending felony charges. It will also ask for
information regarding the municipal advisor or any of its associated
municipal advisor professionals concerning any convictions, guilty or
nolo contendere pleas, or pending charges with respect to a misdemeanor
or conspiracy to commit an offense involving investments or investment-
related business, fraud, false statements, omissions, wrongful taking
of property, bribery, perjury, forgery, counterfeiting, or extortion
during the last ten years. Form MA-T will similarly require disclosure
of disciplinary sanctions imposed by the Commission, the Commodity
Futures Trading Commission, and other Federal, State, or foreign
regulatory authorities, or by self-regulatory agencies, organizations
and commodity exchanges. In addition, it will inquire about injunctions
issued by domestic or foreign courts in connection with investment-
related activities, adverse findings by such courts concerning
investment-related statutes or regulations and pending civil
proceedings that could result in an injunction or finding.
On the execution page of Form MA-T,
