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Dec 2010
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December 29, 2010

Registration Deadline Looms for 'Municipal Advisors'

The Municipal Securities Rulemaking Board (MSRB) today issued a reminder about the year-end MSRB registration requirement for "municipal advisors" under the Dodd-Frank Wall Street Reform and Consumer Protection Act. MSRB registration for municipal advisors is in addition to other MSRB registrations and interim registration with the Securities and Exchange Commission (SEC). Before registering with the MSRB, municipal advisors must first complete SEC registration Form MA-T.

On December 20, 2010, the SEC issued proposed rules to define and explain various statutory terms, including "municipal advisor." The term “municipal advisor” covers persons, both corporate and natural, who provide advice to, or on behalf of, a municipal entity 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 who undertakes a solicitation of a municipal entity for these purposes. It includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders and swap advisors.

The term excludes a broker, dealer or municipal securities dealer only when it is serving as an underwriter for a municipal securities offering. However, the SEC would not exclude:

  • A broker-dealer advising about the investment of bond proceeds or the advisability of a municipal derivative unless acting as an SEC-registered investment adviser; or
  • A broker-dealer acting as a placement agent for a private equity fund that solicits a municipal entity or obligated person to invest in the private equity fund

The term also excludes any SEC-registered investment adviser and the investment adviser's representatives when giving investment advice to a municipal entity but not when engaged in other municipal advisory activities, described above, for which investment adviser registration is not required. The SEC’s release is silent about state-registered investment advisers, so they are not excluded from this definition. A registered commodity trading advisor and its associated persons are excluded when providing advice related to swaps. Attorneys providing traditional legal advice and engineers providing engineering advice also are excluded.

The statute does not exclude banks from the definition of "municipal advisor." However, the SEC’s release asks if, by rule, banks should be permitted to give advice about traditional banking products such as insured checking and savings accounts and certificates of deposit.

MSRB Notice 2010-60 is available here. Here are links containing additional information:

The Broker-Dealer/Investment Adviser Group at Warner Norcross & Judd would be pleased to assist you in understanding these new requirements and completing the registration process. Feel free to contact Shane Hansen (616.752.2145 or shansen@wnj.com) or any other member of group.

NOTICE. Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you.

By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you.

Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.

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