In a recent alert to clients, Goodwin Procter attorneys discussed the impact of the SEC’s new Municipal Advisor Rules on banks and trust companies that provide services to municipal entities and obligated persons. Previously, the firm published an article in the October Financial Services Alert providing a detailed outline of the new rules, including definitions, exemptions, and registration provisions.
A brief introduction to the alert and article, as well as links to the complete text for both resources, can be found below.
What Banks and Trust Companies Need to Know About the SEC’s New Municipal Advisor Rule
The SEC’s final Municipal Advisor Rules, effective January 13, 2014, apply to many of the advisory services and products provided by banks and trust companies to municipal entities, such as state and local governments, and to “obligated persons” who have payment obligations in connection with municipal bond offerings. Municipal advisory activities include advice about the issuance of municipal securities, plans and programs for the investment of the proceeds of municipal securities, such as investment in collective investments or common trust funds, and transactions in guaranteed investment contracts and derivatives.
There are exemptions for some traditional banking services, but other municipal advisory activities of banks and trust companies will require registration as a municipal advisor. Banks and trust companies that do business with municipal entities and obligated persons should review the rules and the nature of their services to those persons to determine whether they are required to register.
To read the complete Client Alert, click here.
SEC Adopts Final Rules for Municipal Advisors
The SEC issued final rules requiring the registration of municipal advisors in SEC Release No. 34-70462 (the “Release”). The rules implement Section 975 of the Dodd-Frank Act, which amended Section 15B of the Securities Exchange Act of 1934 (the “Exchange Act”) to require registration of “municipal advisors,” a new class of regulated persons that, among other things, provide advice to or on behalf of a municipal entity with respect to municipal financial products or the issuance of municipal securities. Compared to the initial rule proposal, the final rule narrows the scope of the registration requirement and provides additional guidance about who is required to register as a municipal advisor and what constitutes municipal advice.
This article provides an overview of the definition, exemption and registration provisions of the final rule, noting important provisions that have changed materially from the initial rule proposal.
To read the complete article in the Financial Services Alert, click here.